Federal Agency: U.S. Department of Education; Office of Federal Student Aid Pass through Entity: Not applicable Program Name: Federal Direct Student Loan Program ALN and Program Expenditures: 84.268 ($866,312) Award Number: P268K253315 Federal Award Year: July 1, 2024 to June 30, 2025 Questioned Costs: $484, net Condition Found: The amount of subsidized Federal Direct Loans awarded was incorrect for four of the ten students in our sample that received Federal Direct Loans. In addition, the two of the students was eligible for additional Federal Direct Loan funds. Criteria: The annual subsidized Federal Direct Loan limit is $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors. For students who are considered independent for financial aid purposes the amount of unsubsidized Federal Direct loans are $6,000 for freshman and sophomores, and $7,000 for junior and seniors. In addition, if a student is only enrolled in an associate’s degree program, the maximum subsidized loan amount the student can receive is $4,500. Cause: Two of the students had several transfer credits that were not considered when determining the grade-level of the student for Federal Direct Loan awarding purposes. One student was enrolled in an associate’s degree program and the degree program was not reviewed before awarding aid. The fourth student’s needs analysis was not reviewed before determining the amount subsidized funds the student was eligible to receive. Possible Asserted Effect: The first student was correctly awarded $5,500 in subsidized funds by the financial office. The third-party administrator changed this amount to $4,500 because the transfer credits were not considered when determining loan eligibility. The second student was correctly awarded $5,500 of subsidized loan per the student award letter. The COD also shows that $5,500 of subsidized loan funds were disbursed to the student. However, only $4,500 of subsidized loan funds were posted to the student’s account. The third student was awarded subsidized loans at the junior level while the student was only eligible for sophomore level subsidized loans. The student received $484 of subsidized loan funds that the student was ineligible to receive. The fourth student was awarded $1,732 in subsidized loans when the student was only eligible for unsubsidized loans. Repeat Finding: See Finding 2024-003 for a similar finding in the prior year. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: For the first student, the Financial Aid Director should determine the correct amount of loans the student was eligible to receive. If the student was eligible for $5,500 in subsidized loans, an additional $1,000 should be requested from the Department of Education For the second student, the Financial Aid Director should work with business office to reconcile student accounts. $1,000 of aid that was disbursed per COD has not been posted to the student’s account. If the student was only eligible for $4,500 in subsidized loans, $1,000 of institutional funds should be returned to the Department of Education on the student’s behalf. For the third student, $484 of Federal Direct Loan funds were returned in December 2025. For the fourth student, $1,732 of subsidized loans should be reclassified as unsubsidized loans.Management Response: For the first student, the student was eligible to receive $5,500 of subsidized funds, but only $4,500 was requested. The University gave the student an additional $1,000 of institutional funds to cover the difference in the amount the student was eligible to receive and the amount requested from the Department of Education in December 2025. For the second student, the COD correctly shows the that $5,500 of subsidized aid was disbursed to the student. However, only $4,500 of subsidized loan funds were posted to the student’s account. An institutional scholarship of $1,000 was posted to the student account in December 2025. For the third student, $484 of subsidized loan funds were returned to the Department of Education in December 2025. For the fourth student, the Director of Financial Aid will work with third party administrator to reclassify the subsidized loan funds as unsubsidized loan funds.