Finding Text
Finding 2024-002 Exit Counseling. Condition: We tested a sample of 40 students, of which 12 required Federal Direct Loan (FDL) exit counseling. For two of these 12 students, the Institution did not timely perform the required exit counseling. The sample was selected using a statistical methodology designed to achieve a 90% confidence level. The resulting error rate (16.7%) exceeded our materiality threshold of 10%. Further, this same issue was identified in a recent U.S. Department of Education program review. Accordingly, expanding the sample would not reduce the materiality of this finding. Criteria: Per 34 CFR §685.304(b), institutions must ensure that each Direct Loan borrower completes exit counseling shortly before the student ceases at least half-time enrollment. Exit counseling must cover repayment options, debt management strategies, and the consequences of default. If the institution is unable to conduct the session prior to the student’s departure, the institution must mail or electronically provide exit counseling materials to the borrower within 30 days of learning that the student withdrew, graduated, or otherwise ceased to be enrolled at least half-time. Documentation of completion or notification must be maintained in the student’s file. Cause: The noncompliance occurred due to oversight during both graduation and withdrawal processes, resulting in exit counseling not being conducted or documented within the required timeframe. Effect: Failure to perform exit counseling increases the risk that students will not understand repayment obligations, raising the likelihood of loan default. Borrower defaults result in increased costs to the U.S. Department of Education. Questioned Costs: $0 –– Non-monetary compliance finding. Recommendation The Institution should strengthen its policies and monitoring controls to ensure exit counseling is consistently completed and documented for all Direct Loan borrowers upon withdrawal or graduation. View of Responsible Officials: The Institution concurs with the finding. See corrective action plan.