Finding Text
Finding No. 2024-002 Late Refund Issuance
Federal Program
ALN 84.268 Federal Direct Student Loans Program
Name of Federal Agency
U.S. Department of Education
Category
Other matters – N. Special test Disbursements to or on behalf of students
Significant deficiency of internal controls over compliance
Criteria
34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by
crediting a student's account and the total amount of all title IV, HEA program funds credited exceeds the
amount of tuition and fees, room and board, and other authorized charges the institution assessed the student,
the institution must pay the resulting credit balance directly to the student or parent as soon as possible but—
(1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class
of a payment period; or
(2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or
before the first day of class of that payment period
Condition found
During our evaluation of compliance with these requirements, we noted one (1) instance, or six percent (6%) of
the sixty (60) samples selected, in which the University failed to return the corresponding refund within 14 days
time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit
balance. Forty-one (41) days passed between the date the University identified an FSA credit balance for the
student and the actual refund to the student.
Finding
Number
Related Audit
Compliance
Requirement
Student
Identifier OPEID
Pell
Disbursed
($)
Pell
Underpayment
($)
Pell Overpayment
($)
Direct
Loan
Disbursed
($)
Direct
Loan
Underpayment
($)
Direct
Loan Overpayment
($)
2024-002
Special Tests -
Disbursements to
students Student 1 1072401 $ - $ - $ - $ 1,793 $ - $ -
Cause
The Direct Loan posting was processed and posted on 8/15/2023. At the time, the student had an outstanding balance owed to the institution of $2,922. Given this balance, the University initially held the refund of $1,793 instead of applying it to the next term, SP23. Another posting for $2,722 was generated on 8/15/2023, the same day as the Direct Loan posting, which meant that the withheld refund no longer needed to be applied to the SP23 term, but due to it all happening on the same day, it was overlooked.
Effect
Failure to issue refunds within the required timeframe may cause financial hardship to students and expose the institution to non-compliance with Title IV regulations, potentially leading to penalties or corrective action from the Department of Education.
Questioned cost
None. The funds were returned.
Context
As part of our compliance tests with the disbursement requirements, we selected a sample from fifty-one (51) students out two thousand four hundred sixty-five (2,465) who received direct loans. Our test disclosed one (1) instance where the refund was not returned on a timely basis.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend that the institution review its refund processing procedures to ensure timely issuance of credit balance refunds within the 14-day window. Implementing internal controls and automated alerts within the system can help flag accounts for timely refund processing to avoid future delays.
Views of responsible officials and planned corrective actions
The University’s management agrees with this finding. Please refer to the corrective action plan on pages 60-63.