Finding 1205770 (2025-004)

Finding 2025-004 Federal Programs: Student Financial Assistance Cluster • Federal Direct Student Loans (ALN 84.268) • Federal Pell Grant Program (ALN 84.063) Federal Award #’s: P268K240395 and P063P230395 Federal Award Years: July 1, 2024 to June 30, 2025 Federal Agencies: U.S. Department of Education Pass Through Entity: None Compliance Requirement: Special Tests and Provisions - Disbursements to or on Behalf of Students Criteria: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed to the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. An institution is permitted to hold credit balances if it obtains a voluntary authorization from the student. Regardless of any authorization obtained by the institution, the institution must pay any remaining loan balance by the end of the loan period and any other remaining Title IV funds by the end of the last payment period in the award year for which the funds are awarded. Condition and Context: The University generates a Title IV refund report following each disbursement date to identify credit balances created on student accounts and facilitate timely refunds in accordance with the required time frame. For 4 out of 40 students selected for testwork, the Title IV funds credited to the students’ accounts resulted in credit balances owed to the students. For 3 of these students, the institution did not refund the credit balances within the required 14-day timeframe and did not obtain proper authorization from the student to retain the balance. The delays in issuing refunds ranged from 15 to 92 days. Additionally, for 1 student, although authorization was obtained to retain the credit balance, the institution did not refund the credit balance by the end of the award year for which the funds were awarded. Cause and Possible Asserted Effect: In the current fiscal year, the University was in the process of implementing enhanced processes related to Title IV returns, and as a result, the controls were not operating effectively. This contributed to the institution’s failure to refund credit balances to students within the 14-day timeframe required by the Department of Education and to obtain voluntary authorization from students to retain credit balances for the semester. Identification of Questioned Costs: There were no questioned costs related to this finding. Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Repeat Finding: This finding is not a repeat of a finding in the immediately prior year. Recommendation: We recommend that management perform a completeness review of the Title IV refunds to ensure all credit balances are refunded to students within the required 14 day timeframe. In addition, management should review the existing system of controls related to the timely refund of credit balances. Further, management should reinforce control ownership and provide targeted training to individuals responsible for compliance. These actions will help ensure that appropriate controls are in place, responsibilities are clearly defined, and instances of noncompliance are prevented or promptly identified and corrected, thereby supporting effective control operation. Views of Responsible Officials: The University agrees with the findings. Management will perform a review of Title IV refunds to ensure credit balances are refunded to students within the required 14-day timeframe. In addition, management will review the existing system of controls related to the timely refund of credit balances. Further, management will reinforce control ownership and provide targeted training to individuals responsible for compliance. The actions will help to ensure that appropriate controls are in place and responsibilities are clearly defined, and instances of noncompliance are mitigated to support controls.