Finding Text
2025-002 – Awarding of Direct Loans Federal Agency: U.S. Department of Education Federal Program Name: Federal Direct Student Loans Assistance Listing Number: 84.268 Federal Award Identification Number and Year: P268K241818; P268K251818 - 2025 Award Period: 7/1/2024 – 6/30/2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 685.203 specifies the annual and aggregate loan limits the Institutions may not exceed for an academic year of study under the Direct Loan program and also requires loans to be prorated for a program of student that is less than a full academic year in length. Condition: Testing identified that 1 out of 40 students was awarded and disbursed Direct Loans in excess of the annual loan limit applicable to the student’s grade level and dependency status. Questioned costs: $5,000 Context: During our testing, one student was awarded and disbursed $12,500 in direct loans, when they were only eligible for $7,500 based on their grade-level and dependency status. Cause: The University did not resolve an ISIR code that identified a direct loan over-award and did not effectively ensure loan limits were properly applied. Effect: The student received Direct Loan funds in excess of their eligible amount, resulting in noncompliance with federal program requirements. Repeat finding: No. Recommendation: We recommend the University strengthen its review procedures over student award packages, including a review at the start of each academic year, to ensure Direct Loans are awarded in accordance with grade level and dependency status limits. We also recommend the University review all ISIR codes and resolve any that are necessary. Views of responsible officials: There is no disagreement with the audit finding.