Finding Text
U.S. Department of Education
Student Financial Assistance Programs Cluster (Direct)
Federal Direct Loan Program (84.268)
Federal Award Year: 2023-2024
Finding: The University’s R2T4 calculation was improper for one student, as the student had
not signed a promissory note for the direct loans and the direct loans should have not been
included in the calculation.
Criteria: Per 34 CFR 668.164, Any undisbursed Title IV aid for the period that the school
uses as the basis for the R2T4 calculation is counted as aid that could have been disbursed
as long as the following conditions were met before the date the student became ineligible:
For all programs, the Department processed a Student Aid Report (SAR) or Institutional
Student Information Record (ISIR) with an official expected family contribution (EFC) for the
student. (An official EFC is one calculated by the Department and provided on a SAR or
ISIR. It may or may not be a valid EFC, which is one based on complete and correct
information.)
In all Title IV loan programs, a promissory note must be signed for a loan to be included as
aid that could have been disbursed in an R2T4 calculation. The signature may be obtained
after the student withdraws but must be signed before the school performs the R2T4
calculation. In addition, if a school has an affirmative confirmation process set up to actively
determine if a student wants a Direct Loan, if the student declines or fails to respond to the
request, the Direct Loan would not be included as aid that could have been disbursed.
Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal
awards establish and maintain internal controls designed to reasonably ensure compliance
with Federal laws, regulations and program compliance requirements. Effective internal
controls should include procedures to ensure enrollment reporting is completed properly.
Condition: One student did not sign a promissory note for direct loans that were included in
the R2T4 calculation; therefore, the University’s R2T4 calculation was improperly calculated
and the internal controls in place did not identify the errors.
Cause: Student did not sign a promissory note for direct loans.
Effect: Noncompliance with federal regulations for R2T4
Questioned costs: Amount refunded was underpaid by $79.
Context: One of the eight students selected randomly and tested did not sign a promissory
note for direct loans that were included in the R2T4 calculation; therefore, the University’s
R2T4 calculation was improperly calculated.
Repeat finding: This is not a repeat finding.
Recommendation: The University should review the controls and procedures in place to
verify that only aid with signed promissory notes are being included in R2T4 calculations.
Views of responsible officials: Management agrees with this finding. See corrective action
plan.