Finding Text
FINDING 2024-002 – Special Tests and Provisions – Enrollment Reporting: Significant Deficiency in Internal Control over Compliance (See SFQC - Section III - Finding 2024-002 for included table)
Criteria – Direct Loan, 34 CFR section 685.309(b)(2)(i): An institution is required to notify the Department of Education within 30 to 60 days (depending on the method of communication) if it discovers that a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan has been made to or on behalf of a student who enrolled at that institution but has ceased to be enrolled on at least a half-time basis.
Condition/Context – A sample of 25 out of a population of approximately 196 federal aid recipient students were selected from system generated reports of students who had a reduction or increase in attendance levels, graduated, withdrew, dropped out, or enrolled but never attended during the 2023-2024 academic year. A comparison was made between each selected student’s National Student Loan Data System (NSLDS) enrollment detail to the student’s academic files and other institutional records to verify that the College was accurately reporting significant campus-level and program-level enrollment data within the required time frame. Of the 25 students whom had a change in address, graduated, or withdrew, 1 was not reported to the NSLDS within the required timeframe.
Questioned Costs – No questioned costs were identified as part of this finding.
Effect – Enrollment status is utilized by students, the U.S. Department of Education, the Direct Loan program, lenders, and other institutions to determine in‐school status. NSLDS also uses the newly submitted enrollment data to recalculate a student’s 150% limit for direct subsidized loans to determine if loss or protection of the subsidy should occur. Therefore, this significant deficiency in enrollment reporting could result in incorrect future eligibility for undergraduate aid, as well as impact future subsidy loss or protection related to the 150% limit.
Cause – The student status change was not timely reported due to the College not having effective internal controls established to prevent, or detect and correct, the non-compliance in a timely manner.
Repeat Finding – This is not a repeat finding.
Recommendation – We recommend the College implement a detective control by which a sample of student status changes are subsequently verified within the NSLDS for accurate and timely reporting.
Views of Responsible Officials and Planned Corrective Actions – Otis College of Art and Design agrees with the finding. The Executive Director of Financial Aid and The One Stop, Michaela Matsumoto and Registrar Nicole Raef are the responsible individuals for implementation of the corrective action plan. Upon review of the finding, Financial Aid administration met with Registrar’s staff to create a new procedure whereby immediate reporting of withdrawals are made directly to NSLDS in addition to the regularly scheduled monthly reports to NSLDS through the National Student Clearinghouse (NSC). This immediate reporting should eliminate any timing issues with the monthly reports through NSC. In addition, a joint effort to streamline the routing of withdrawal forms to the appropriate departments for faster processing is underway. This reprocessing of the withdrawal forms will be implemented in the next 120 days.