Finding Text
Annual and Aggregate Loan Limits Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 685.203 (b) stipulates that a dependent student may receive an additional unsubsidized loan in the amount of $2,000. Students whose parents are likely to be precluded by exceptional circumstances from receiving a PLUS loan may be eligible for an unsubsidized loan beyond the base amount of $2,000. The total amount of Direct unsubsidized loans but excluding the amount of capitalized interest may not exceed (1) for a dependent undergraduate student, $23,000, or, effective July 1, 2008, $31,000, minus any Direct subsidized loan, and (2) for an independent undergraduate or a dependent undergraduate who qualifies for additional eligibility, $57,500, minus any Direct subsidized loan. Conditions and Context I noted during my audit one (1) student out of twenty-five (25) tested received $5,000 in unsubsidized loans in excess of the annual loan limit of $2,000, without a PLUS loan denial on file. The University used professional judgment to justify the additional unsubsidized loan. The supporting documentation for the professional judgment was not provided for audit review. Cause The University did not maintain or provide sufficient documentation to support the use of professional judgment in awarding unsubsidized loan funds in excess of standard limits. It appears that the University did not ensure that the student was eligible to receive the loan proceeds. Questioned Costs For the purposes of this condition, I have questioned costs totaling $5,000 related to the Direct loan program. Effect Without proper documentation, there is no assurance that the additional unsubsidized loan amount was awarded in compliance with federal regulations, which may result in noncompliance and potential liabilities. The University has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. Repeat Finding Yes. See 2024-003. Recommendation The University should ensure that all professional judgment decisions are fully documented, including the rationale and supporting evidence, and retained in the student’s file. Additionally, controls should be strengthened to verify that required documentation (such as PLUS loan denials or professional judgment justification) is obtained and reviewed prior to disbursing funds in excess of standard loan limits. Management’s Response The University acknowledges the finding regarding the awarding of unsubsidized loan funds in excess of annual limits without adequate supporting documentation. We recognize that federal regulations require either a valid PLUS denial or fully documented professional judgment to support additional unsubsidized eligibility. Corrective Actions 1. Strengthened Documentation Requirements: Effective immediately, financial aid staff will maintain complete professional judgment documentation, including the rationale, supporting evidence, and approval, in the student’s file before any additional unsubsidized loan is awarded. 2. Verification Controls: A mandatory checklist has been implemented to ensure that a PLUS denial or documented professional judgment is obtained and reviewed prior to disbursement of any loan amount exceeding standard limits. 3. Staff Training: The Office of Financial Aid will conduct targeted training to reinforce Title IV loan limit rules and proper documentation standards. 4. Ongoing Monitoring: Supervisory review will be performed on all professional judgment decisions and on any loan increases exceeding the standard $2,000 annual limit. The University believes these corrective measures will address the root cause of the finding and ensure full compliance with federal loan regulations going forward.