Finding Text
Finding 2025-002 – Significant Deficiency: Eligibility - Compliance and Control Finding Student Financial Aid Cluster Federal Agency: U.S. Department of Education Federal Award Number: 84.268 Criteria: Under the Federal Direct Loan program, institutions must determine student loan eligibility based on Cost of Attendance (COA), Student Aid Index (SAI), Other Financial Assistance (OFA), and remaining annual and aggregate loan limits. Schools are required to monitor annual loan limits based on the student’s academic grade level progression. Schools must ensure that loan awards reflect the grade level, COA, and OFA at the time of origination and must update loan eligibility when these factors change. Condition: In our nonstatistical sample of 40 students selected for eligibility testing, we noted 8 students were underawarded subsidized and/or unsubsidized loans and 1 student that was overawarded unsubsidized loans. Cause: The University did not have adequate controls in place to ensure that student loan eligibility was recalculated when key factors, such as academic grade level progression, COA adjustments, or changes in OFA, occurred after initial packaging. No additional secondary verification of loan eligibility following academic grade level progression or COA/OFA changes was completed. Effect: Eight students received underawards totaling $11,668, consisting of subsidized and unsubsidized Direct Loans for which they were eligible but did not receive. One student received an overaward of unsubsidized loans totaling $3,931. Failure to update loan eligibility increases the risk of noncompliance with federal regulations governing Direct Loan awards. Questioned Costs: $3,931 related to overaward of unsubsidized loans. The overaward is considered isolated and therefore no likely questioned costs were identified related to this overaward. The underawards are not considered to be questioned costs as no funds were expended related to the underawards. Context: During our audit, we identified 5 students in our sample that achieved an additional academic grade level progression after completion of attendance in the Spring 2024 semester. The students were packaged loans for the 2024-2025 academic year before the Spring 2024 semester ended without the academic grade level progression as impacted by completing the Spring 2024 semester factored into the student’s loan package. After the completion of the Spring 2024 semester, the students’ loans were not updated to provide the student with additional aid available to them such as when a student progress from a 2nd year to a 3rd year student. The remaining 3 students that had underawards of subsidized and unsubsidized direct loans were due to the students not being repackaged aid after the student’s Cost of Attendance (COA) or Other Financial Assistance (OFA) was adjusted. The overaward identified for one student of $3,931 was due to the COA not being adjusted for a reduction in expected enrollment for the Spring 2025 and Summer 2025 semesters. Identification As A Repeat Finding: Not a repeat finding. Recommendation: We recommend that the University strengthen internal controls over loan packaging and eligibility determinations by implementing systematic controls within the financial aid system to ensure that academic grade level progression, COA revisions, and OFA changes automatically prompt a required review of loan eligibility and by establishing a post-term audit process to confirm that students who progress to a new grade level or whose budgets change have been appropriately repackaged. Views Of Responsible Officials: Management concurs with the finding. The University has implemented controls to ensure that academic grade level progression and COA/OFA adjustments trigger a mandatory review of eligibility through the use of new reports and workflows. Completion Date: February 2026 Contact Person: Joanne Rozborski, Assistant Vice President, Student Financial Services