Finding Text
FINDING 2024-002
Federal Program Information: Federal Direct Student Loans (ALN 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Test and Provisions – Disbursements To or On Behalf of Students - Loan Disbursement Notifications: 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: The University was unable to provide evidence of loan disbursement notifications for certain students.
Cause: Administrative oversight.
Effect or Potential Effect: The University was unable to evidence compliance with loan notification requirements for those students.
Questioned Costs: None.
Context: For 8 of 25 disbursements tested, the University was unable to provide documentation showing that a notification was sent within the required timeframe to the borrower regarding the loan disbursement.
Identification as a Repeat Finding: This is a repeat of prior year Finding 2023-002.
Recommendation: We recommend the University enhance its procedures over loan notifications to ensure timely and accurate notification to borrowers within the prescribed timeframe.
Views of Responsible Officials: The error falls into the category of human oversight rather than fundamental misunderstanding of the regulation or timing of processes. A loan disbursement notification was sent to the students in question; however, we can only document the loan disbursement notification was sent but are unable to document the date or content of the communication. Students identified with missing communications are from spring 2024. Our internal processes dictate that the notification would normally be sent on the date of disbursement. We will develop and implement a loan disbursement notification to loan recipient reconciliation process to effectively capture students with missing communications to ensure that both a record of the notification and the date are maintained.