Finding Text
2025-004 Direct Programs – Department of Education ALN # 84.268, 84.063, 84.007, 84.033 Student Financial Assistance Cluster – Special Tests and Provision – Disbursement to or on Behalf of Students Significant Deficiency in Internal Controls Over Compliance Criteria: Prior to making a disbursement, the school must notify students of the amount and type of Title IV funds they are expected to receive, and how and when those disbursements will be made (often referred to as an award letter or college financing plan) (34 CFR 668.165(a)(1)). Additionally, when direct loans are being credited to a student’s account, the institution must 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; 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 (a minimum of 14 or 30 days depending on confirmation process). Institutions that implement an affirmative confirmation process (as described in 34 CFR 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. Condition: During our review of the direct loans disbursed to students, we noted notifications were not sent to students and parents as required. Cause: The College’s existing control procedures to ensure proper notification to students and parents were not functioning properly. Effect: The College did not send the required notifications to students and parents receiving loans under Title IV. Questioned Costs: None Sampling: A nonstatistical sample of 60 students out of 1,696 students were selected for testing. Within this sample of 60 there were 13 students receiving loans. Total population of students receiving loans was 718. Repeat Finding from Prior Years: No Recommendation: The College should implement a control process to ensure proper notification of loans is sent to students and parents within the timeframe required by DOE. Views of Responsible Officials: The Director of Financial Aid agrees with the finding.