Finding Text
Finding 2025-005 (continuing finding): Policies and Procedures Related to Packaging Student Financial Aid (significant deficiency) Statement of Condition: From our testing sample of twenty-five (25) students, we found twenty-two (23) instances where notices of federal direct loans being credited to a student’s account could not be vouched. We also noted that from our same sample of twenty-five (25) students, we found three (3) students who were transfer students and incorrectly packaged as freshman, rather than their appropriate grade levels based on transfer credits previously earned. Criteria: In accordance with Volume 4 Chapter 2 of the Federal Student Aid Handbook, the school must notify the borrower in writing within 30 days of funds being credited to the account: 1) the anticipated date and amount of disbursement, 2) the right to cancel, and 3) the deadlines to notify the school if they wish to cancel. In accordance with Volume 2 Chapter 7 of the Federal Student Aid Handbook, a school must keep comprehensive, accurate program and fiscal records related to its use of FSA Funds. Student records should be retained to “show a clear audit trail for FSA program expenditures.” This includes maintaining documentation that required notifications were provided to students. Federal student aid must be awarded and disbursed based on each student’s correct grade level and academic progression so that the annual and aggregate loan limits and other eligibility determinations are accurate. Effect of Condition: We found twenty-three (23) instances where borrower notifications were not retained. We also found three (3) instances where transfer students were incorrectly packaged at a lower grade level. Cause of Condition: The College implemented a new system student information system in the prior year, which does not have configurations to capture and retain evidence of required borrower notifications. Additionally, the College did not have a formal review process to verify that transfer students’ grade levels and academic progression were accurately reflected in the system before packaging aid. Recommendation: We recommend the College develop policies and procedures to address these issues. Management’s Response: Management agrees and will submit a Corrective Action Plan to implement these recommendations immediately.