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Federal Program Information: Federal Direct Student Loans (ALN: 84.268) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Test and Provisions – Disbursements To or On Behalf of Students – Loan Disbursement Notification - Federal regulations (34 CFR section 668.165 (a)(6)(i)) require that the institution 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 the 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 section 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. Institutions that do not implement an affirmative confirmation process must notify a student no earlier than 30 days before, but no later than seven days after, crediting the student’s account and must give the student 30 days (instead of 14) to cancel all or part of the loan. Condition: Certain student and/or parent borrowers did not receive a loan disbursement notification within the required timeframe. Additionally, certain loan disbursement notifications made to student and/or parent borrowers did not contain all required information. Cause: Insufficient administrative oversight and internal controls with respect to loan disbursement notifications. Effect or Potential Effect: Students and/or parents were not properly notified of loan disbursements and/or their right to cancel/decline loan awards. Questioned Costs: None. Context: We noted the following exceptions during our testing: • For 13 of 40 disbursements tested, the University was unable to provide documentation supporting appropriate loan disbursement notifications were sent to the student and/or parent for the selected disbursement. • For 8 of 40 disbursements tested, the loan disbursement notification sent to the student and/or parent was not issued within the required timeframe. • For 27 of 40 disbursements tested, the loan disbursement notification sent to the student and/or parent did not include the date of the disbursement, as required. Identification as a Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2024-004 in the prior year schedule of findings and questioned costs. Recommendation: We recommend the University enhance its internal controls and policies and procedures over loan disbursement notifications to ensure such notifications are sent to student and/or parent borrowers within the required timeframe. Views of Responsible Officials: The University acknowledges deficiencies in its Direct Loan disbursement notification process during the 2024–2025 award year. Specifically, the University was unable to consistently document that required loan disbursement notifications were issued to students or parents, certain notifications were not sent within the required regulatory timeframes, and required notification elements—most notably the disbursement date—were omitted from a number of notifications. The University determined that these deficiencies resulted from weaknesses in internal controls governing the generation, content validation, timing, and documentation of loan disbursement notifications. The notification process relied on manual and partially automated workflows that were not consistently monitored to ensure compliance with federal requirements under 34 CFR §668.165(a)(6). In addition, oversight of the Parent PLUS notification process was insufficient, resulting in inconsistent practices and notifications that did not always include all required disbursement information within the notification itself. The absence of a standardized, system-generated audit trail documenting the issuance, timing, and content of loan disbursement notifications limited the University’s ability to demonstrate compliance during audit testing. As a repeat finding, these conditions revealed the need for strengthened automation, standardized notification templates, and enhanced supervisory review to ensure timely, accurate, and fully documented borrower notifications.