Finding Text
Information on the federal program – Department of Education – Federal Direct Loan
Program, CFDA 84.268
Criteria or specific requirement – Special Tests - Disbursements – When Direct
Loans are being credited to a student’s account, the institution must notify the
student, or parent, in writing of (1) the date and amount of the disbursement; (2) the
student’s right, or parent’s right, to cancel all or a portion of that loan or loan
disbursement and have the loan proceeds returned to the holder of that loan; and (3)
the procedures and time by which the student or parent must notify the institution that
he or she wishes to cancel the loan (34 CFR Section 668.165(a)(2)(i-iii)).
Condition – Students are provided account statements showing the disbursement
amounts and dates (34 CFR Section 668.165(a)(2)(i), however, these disbursement
notifications did not contain all information required by 34 CFR Section
668.165(a)(2)(ii-iii).
Questioned costs – N/A - Nonmonetary finding
Context – Out of 25 students tested, 23 students had direct loan disbursements in
which they were not provided a disbursement notification with all information required
by 34 CFR Section 668.165(a)(2)(ii-iii). Students were provided account statements
showing the disbursement amounts and dates.
Effect – Students were not provided with all language required for disbursement
notifications
Cause – This was an oversight by the University. With the implementation of new
software, a disbursement notification was not programmed into the software.
Identification as a repeat finding, if applicable – N/A
Recommendation – We recommend the Office of Financial Aid utilize their financial aid
processing software to implement disbursement notifications which include all
information required by (34 CFR Section 668.165(a)(2) to be sent electronically to
students once disbursements are posted.
Views of responsible officials and planned corrective actions – Management is in
agreement with this finding. The Office of Financial Aid and Scholarships drafted a
letter using best practices laid out by NAFSAA. The System Specialist, who is
responsible for disbursing aid, has created documentation that has been added to the
disbursement process. Once disbursement is complete, the System Specialist will run
the process in PowerFAIDS that will send the Loan Disbursement Notification via
email to students who have received loans. This includes students who have received
Federal Direct Subsidized, Unsubsidized, Parent PLUS, Grad PLUS, and private
loans.