Finding Text
Finding 2024-002 – Special Tests and Provisions - Return of Title IV Funds
Federal Agency: U.S. Department of Education
Program: Student Financial Assistance Cluster (84.268 Direct Loans, 84.063 Federal Pell Grant
Program)
Criteria:
In accordance with 34 CFR §668.22(j), when a recipient of Title IV grant or loan assistance
withdraws from an institution during a payment period or period of enrollment, the institution
must return any unearned Title IV funds to the Department of Education within 45 calendar days
from the date the institution determined the student withdrew.
Condition/Context:
Our initial sample of students who withdrew from the Institution was 3, and from this sample, we
encountered 1 student whose required return to Title IV was late. Due to the high error rate of 1
out of 3, we expanded our testing. From a population of 20 students who withdrew and had funds
returned, we selected an additional 13 students to test for the timely return of funds. The sample
was based on a 90% confidence level with a 10% margin of error.
Of the 16 students who withdrew and required a return of Title IV funds, we noted that in 5 cases
(31.25%), the institution did not return the funds to the Department of Education within the
required 45-day timeframe. Cause:
The institution utilizes a third-party service provider, ECM, to calculate Return to Title IV
(R2T4) amounts and transmit the required returns to the Department of Education. The
institution initiates this process by completing and submitting a “Return to Title IV Request
Form” to ECM. Our testing indicated that the institution submitted these forms to ECM within
the required timelines. However, ECM experienced delays in processing due to significant
personnel turnover and system-related issues. In April 2024, ECM notified the institution that it
was updating its SOLFIA platform to comply with new Department of Education technical
specifications. These updates were not completed until September 2024, after which ECM
continued to experience technical issues that further delayed processing. The institution has
represented that these external challenges impacted its ability to meet the 45-day deadline for
returning Title IV funds.
Effect:
The institution was not in compliance with federal regulations regarding the timely return of
Title IV funds. Late refunds could result in potential liabilities, increased scrutiny, or sanctions
by the Department of Education.
Questioned Costs:
Known questioned costs are not considered material; however, due to the compliance nature of
the finding and the frequency of occurrence, the finding is deemed material for reporting
purposes. Recommendation:
We recommend that the institution formally document and strengthen oversight of third-party
service providers responsible for Title IV compliance. This includes establishing performance
expectations, monitoring protocols, and contingency plans to ensure continuity during periods of
vendor transition or system outages. We further recommend that the institution assess whether
additional internal controls or staffing can supplement or verify timely R2T4 processing,
particularly during periods of known vendor instability.
Views of Responsible Officials and Corrective Action Plan:
The institution agrees with the finding. A corrective action plan addressing the noted deficiencies
has been submitted under separate cover.