Finding Text
Finding 2024-004 – N. Special Tests and Provisions – Disbursements To or On Behalf of Students – Loan Disbursement Notifications
Information on Federal Program(s) - Federal Direct Student Loans (ALN 84.268)
Criteria or Specific Requirement - Federal regulations (34 CFR section 668.165 (a)(6)(i)) require that the institution 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 or the TEACH Grant payments returned to the U.S. Department of Education; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, TEACH Grant, or TEACH Grant disbursement. Institutions that implement an affirmative confirmation process (as described in 34 CFR section 668.165 (a)(6)(i)) must make this notification to the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student’s account at the institution with Direct Loan or TEACH Grants. The Federal Student Aid Handbook further clarifies that in general, there are two types of notifications a school must provide: (1) a general notification to parent Direct PLUS borrowers and all students receiving Federal Student Aid (“FSA”) funds, and (2) a notice when FSA loan funds or TEACH Grant funds are credited to a student’s account.
Condition – Certain borrowers were not notified timely of Federal Direct Student Loans credited to their accounts.
Cause - Administrative oversight and insufficient internal controls.
Effect or Potential Effect - The University was not in compliance with loan disbursement notification requirements.
Questioned Costs – None.
Context – For 2 of 40 disbursements tested, the University did not notify the borrower within the required timeframe. In addition, 2 of 40 notifications tested contained inaccurate disbursement dates.
Indication of Repeat Finding - This is a repeat of prior year Finding 2023-006.
Recommendation – We recommend the University enhance its procedures and internal controls over loan notifications to ensure timely and accurate notification to borrowers.
Views of Responsible Officials – We recognized that students were not receiving the Right to Cancel notifications in a timely manner. We also understood the need for students to receive this information to make an important educational/fiscal decision. As of September 2023, on a monthly basis, notifications were sent to student University emails and parent’s personal email (Plus Loan recipients) informing them of their Right to Cancel.