Finding Text
Finding 2025-03 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Untimely Release of Title IV Credit Balances (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must Pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that nine (9) out of sixty (60) sampled students had Title IV–created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs – $0 Perspective – Title IV credit balance requirements are considered a high-risk compliance area because they involve the timely handling of federal funds owed directly to students. In this instance, nine (9) out of sixty (60) students tested (15%) were found to have Title IV–created credit balances that were not released within the required 14-day timeframe. This failure rate indicates that the delays were not isolated timing errors but rather reflect a systemic weakness in the College’s Title IV cash management controls. Repeat Finding – No Auditor’s Recommendation – The College should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. Management’s Response – The College accepts the recommendation. The institution has reviewed the audit finding and acknowledges that student refunds were not consistently issued within the required 14-day timeframe due to students’ incomplete admissions requirements. The institution recognizes this as a compliance deficiency and has implemented revised processes and internal controls to ensure timely and compliant issuance of student refunds going forward. Under the revised refund process, the Business Office staff identify student credit balances and prepare refund requests. These requests are reviewed by the Registrar’s Office to reconfirm when admission requirements have been met and by the Financial Aid Office to confirm that federal student aid has been properly originated and disbursed through the Common Origination and Disbursement (COD) system. If it is determined that a student’s admissions requirements are incomplete and a refund has been created, the Business Office notifies the Financial Aid Office to cancel all applicable federal student aid and return the funds to the U.S. Department of Education through COD. When a student’s admissions requirements have been met, then the Business Office completes the refund process by transmitting the approved refund file to the institution’s third-party refund vendor and submitting funds for release to students. These revised procedures strengthen oversight, improve interdepartmental coordination, and ensure compliance with federal refund timelines. College administrators for each department (Vice President for Student Affairs and Vice President for Business and Finance) will be responsible for informing staff of changes in campus operations that may have an impact on their ability to process refunds. View of Responsible Officials – The College agrees with the finding.