Finding 1172850 (2025-002)

Compliance Requirement: Disbursements to or on Behalf of Students Campus: Fullerton and Los Angeles Cluster name/program: Student Financial Assistance Cluster Federal Assistance Listing Numbers: 84.063 Federal Pell Grant Program and 84.268 Federal Direct Loans Federal Award Identification Number: None Federal Agency: U.S. Department of Education Passed through Entity: None Award Year: July 1, 2024 – June 30, 2025 Criteria: The U.S. Code of Federal Regulations 34 CFR 668.165 requires that institutions 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 or the TEACH Grant payments returned to ED; 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 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. In addition, CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition and Context: The Los Angeles and Fullerton campuses did not notify students within 30 days of crediting the students' account as the controls to ensure students received disbursement notifications were not operating effectively. During the eligibility & disbursement testwork over 40 students that received loans under Title IV, we noted the following at the Fullerton and Los Angeles Campuses: • At the Fullerton campus, post award disbursement notifications were sent after the 30-day requirement for 3 sampled students. • At the Los Angeles campus, post award disbursement notifications were not sent to any of the 6 sampled students for the entire academic year. Cause and Effect: The Fullerton campus experienced personnel changes resulting in a gap in responsibility and understanding of the process, leading to missed or late notifications. The Los Angeles campus experienced personnel changes which led to a lack of awareness of who was responsible for completing the federal disbursement notification requirements. The financial aid team was not aware that they had historically been responsible for the requirement, hence there was no processes in place to send out disbursement notifications. Questioned Costs: No Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding: No Recommendation: We recommend the University provide proper training on the disbursement notification requirements and apply its existing policies and procedures. Views of Responsible Officials: The University concurs with the recommendation. The University will review and enhance its procedures to ensure timely disbursement notification.