Finding Text
DEPARTMENT OF EDUCATION- Student Financial Aid Cluster COMPLIANCE FINDING 2025-002 Special Tests and Provisions – Disbursements to or on behalf of Students Criteria: Federal regulation 34 CFR §668.164(l) states: (1) Notwithstanding any State law (such as a law that allows funds to escheat to the State), an institution must return to the Secretary any title IV, HEA program funds, except FWS program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the Federal portion of the payroll disbursement. (2) If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Secretary before the end of this 45-day period. (3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued the check. Condition: In a sample of twenty-five (25) title IV outstanding checks, systematically selected, we found five instances where uncashed title IV checks were not returned to the Department of Education within 240 days from the issuance of the check. The institution provided supporting documentation as evidence that the required funds were sent back to the Department of Education through the G5 system prior to the issuance of our report. Management reviewed the entirety of the population and all uncashed title IV checks were refunded through the G5 system. Supporting documentation was provided. Cause: The process of evaluating outstanding checks was not performed in a timely fashion. This process should have been done at least quarterly. With staff turnover and new position appointments, this process was omitted. It was on the radar of the Business Office staff, but time did not permit the completion of this process. Effect: The institution did not return uncashed title IV checks timely to the Department of Education as required. Recommendation to prevent future occurrences of the deficiency identified: The institution should strengthen its controls over the monitoring and timely return of unclaimed Title IV credit balance checks to ensure compliance with 34 CFR §668.164(l). Specifically, management should implement and document procedures to: 1. Track all Title IV disbursements issued by check, including the issuance date and applicable return deadlines. 2. Perform periodic (at least monthly) reviews of outstanding Title IV checks to identify uncashed items approaching the 240-day return requirement. 3. Ensure uncashed Title IV checks are returned to the U.S. Department of Education within 240 days of issuance when checks are not cashed or otherwise negotiated. 4. Assign clear responsibility for monitoring outstanding checks and returning funds and provide training to staff involved in Title IV disbursement and reconciliation processes. 5. Retain documentation evidencing timely monitoring, review, and return of Title IV funds to support compliance and audit review. Views of Responsible Officials and Planned Corrective Actions – See Corrective Action Plan