Finding Text
FINDING 2025-002 Federal Program Information: Student Financial Aid Cluster (ALN: Various) Criteria or Specific Requirement: N. Special Tests and Provisions – Disbursements to or on Behalf of Students – Notification of Disbursements - The institution must provide notification to the student of the amount of 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)). When Direct Loans or TEACH funds 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 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 (a minimum of 14 or 30 days depending on confirmation process). The notification requirement for loan funds applies only if the funds are disbursed by EFT payment or master check (34 CFR 668.165). 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. Condition: For certain students selected for testing, evidence of award letters being sent to the student could not be provided, or the award letter was not sent timely. For certain students selected for testing, evidence of a disbursement notification being sent to the student or parent could not be provided, or the notification was not sent timely. Cause: Insufficient internal control and administrative oversight. Additionally, the system automated notification function was inadvertently turned off, requiring all notifications during the year to be processed manually. Effect or Potential Effect: The University was not in compliance with the requirements for notifying students or parents of the awards they could expect to receive, or the disbursement of federal loan funds to their account. Questioned Costs: None. Context: For 2 of 25 students tested, the University was unable to provide documentation supporting award letters being sent to the student. For 1 of 25 students tested, the University did not provide the student with an award letter until subsequent to the disbursement of funds. For 20 of 25 students tested, the University was unable to provide documentation supporting appropriate loan disbursement notification to students and/or parents. For 3 of 25 students tested, the loan disbursement notifications were not made within the required timeframe. Identification as a Repeat Finding: There was no similar finding identified during the prior year. Recommendation: We recommend that the University enhances its internal controls over compliance to ensure that students or parents are appropriately notified of awards and disbursements as required. Views of Responsible Officials: A sample review identified documentation gaps in Award Letters and Loan Disbursement Notifications. Notification processes were manual, leading to inconsistent documentation in the financial aid management system during employment transitions that occurred during the award year. In October 2025, Southern Virginia University transitioned both award letter notifications and loan disbursement notifications to an automated process through the Student Financial Aid Management System. All notifications are now system-generated and automatically logged within each student’s record, ensuring a complete and permanent communication history. The Financial Aid Office will maintain automated notification workflows and conduct an annual review before each aid year to verify that award letter and loan disbursement notifications are generating automatically, and documentation of the notifications is happening correctly.