Finding Text
Federal Program Information: Federal Supplemental Educational Opportunity Grants (ALN: 84.007), Federal Pell Grant Program (ALN: 84.063), and Federal Direct Student Loans (ALN: 84.268) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Tests and Provisions – Return of Title IV Funds: The amount of earned Title IV grant or loan assistance is calculated by determining the percentage of Title IV grant or loan assistance that has been earned by the student and applying that percentage to the total amount of Title IV grant or loan assistance that was or could have been disbursed to the student for the payment period or period of enrollment as of the student’s withdrawal date. A student earns 100 percent if his or her withdrawal date is after the completion of 60 percent of (1) the calendar days in the payment period or period of enrollment for a program measured in credit hours, or (2) the clock hours scheduled to be completed for the payment period or period of enrollment for a program measured in clock hours (34 CFR 668.22(e)(2)). Otherwise, the percentage earned by the student is equal to the percentage (60 percent or less) of the payment period or period of enrollment that was completed as of the student’s withdrawal date. The percentage of Title IV grant or loan assistance that has not been earned by the student is the complement of one of these calculations. Standard term-based institutions must always use the payment period as the basis for the determination. The unearned amount of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by the student from the amount of Title IV aid that was disbursed to the student as of the date of the institution’s determination that the student withdrew (34 CFR 668.22(e)). Returns of Title IV funds must be distributed in the prescribed order (34 CFR 668.22(i)). Post-withdrawal disbursements of loan funds may be credited to the student’s account if currentyear outstanding charges exist on the student’s account, up to the amount of the current-year outstanding charges only after obtaining confirmation from the student, or parent in the case of a parent PLUS loan, that he or she still wishes to have some or all of the loan funds disbursed 34 CFR 668.22(a)(6)). Condition: For certain students that withdrew during the year, the University did not properly calculate the amounts to be returned to the ED. Additionally, funds due for return were not returned in the proper order. Finally, the University made a post-withdrawal disbursement of direct loans to certain students in excess of the amount of current-year outstanding charges and without obtaining the required authorization from the student or parent. Cause: Insufficient administrative oversight and internal controls with respect to return of Title IV funds calculations. Effect or Potential Effect: The University was not in compliance with the return of Title IV funds requirements. Questioned Costs: Known questioned costs: $17,226; total questioned costs: indeterminable. Known questioned costs of $17,226 were identified as a result of the described errors in withdrawal calculations; sufficient information was not available to determine whether questioned costs may have resulted from similar issues in the untested population. Context: We noted the following exceptions during our testing: • For 4 of 4 sampled students, return of funds calculations were not completed timely and the amount of Title IV aid due for return or post-withdrawal disbursement was not properly calculated. • For 1 of 4 sampled students, a post-withdrawal disbursement of direct loan funds was made to the student without obtaining the required student authorization, and the amount disbursed was in excess of the eligible post withdrawal disbursement amount. • For 3 of 4 sampled students, Title IV funds due for return were not returned to the ED within the required time frame. Identification as a Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2024-007 in the prior year schedule of findings and questioned costs. Recommendation: We recommend that the University enhance its internal controls and policies and procedures over the applicable compliance requirements to ensure that student withdrawal calculations are prepared accurately. Views of Responsible Officials: The University acknowledges deficiencies in the administration of Return of Title IV (R2T4) requirements during the 2024–2025 award year. Specifically, R2T4 calculations were not consistently completed within required timeframes, resulting in inaccurate determinations of earned and unearned Title IV aid, untimely returns of funds to the U.S. Department of Education, and an improper post-withdrawal disbursement of Direct Loan funds made without required student authorization and in excess of the eligible amount. As a result, the University experienced compliance failures related to accuracy, timeliness, and authorization requirements governing R2T4 processing and post-withdrawal disbursements. The University determined that these deficiencies were primarily attributable to weaknesses in internal controls governing the timely initiation, calculation, review, and completion of R2T4 determinations, as well as insufficient controls to prevent post-withdrawal disbursements from being processed without documented authorization. Contributing factors included gaps in coordination and information flow between offices responsible for withdrawal determination, enrollment status updates, and R2T4 processing. As a repeat finding, these conditions revealed the need for strengthened system-based controls, clearer delineation of responsibilities, and enhanced oversight.