Finding 1238094 (2025-002)

Federal Program: Student Financial Assistance Cluster • Federal Direct Student Loans (ALN 84.268) • Federal Pell Grant Program (ALN 84.063) Federal Agency: U.S. Department of Education Pass Through Entity: None Federal Award Year: January 1, 2025 to December 31, 2025 Compliance Requirement: Special Tests and Provisions – Disbursements to or on behalf of students Criteria Requirement: Per the Uniform Guidance, when Title IV funds are credited to a student account and they exceed the amount of tuition and fees, room and board, and other authorized charges assessed 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: (i) the first day of class of a payment period if the credit balance occurred on or before that day, or (ii) 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 were awarded. Conditions Found: For a sample of 39 students who received Title IV funds credited to student, the following were noted: • For 3 of the 39 students selected for testing, the institution did not refund the credit balances back to the student within 14 days and did not obtain authorization from the student to retain the balance. Cause and Possible Asserted Effect: This resulted in a control failure by the institution to make payments to students within the 14-day timeframe required by the Department of Education and did not obtain voluntary authorization from the student to retain credit balances. Therefore, this evidenced the lack of an appropriately designed control by the institution to ensure credit balances are refunded to students within the timeframe requirements. Identification of Questioned Costs: There are no questioned costs related to this finding. All credit balances were appropriately refunded by the end of the semester and therefore there were no questioned costs or misstatements that occurred as it related to the SEFA or financial statements. Sampling: This sample was not intended to be and was not a statistically valid sample. Identification of Repeat Finding: This audit finding is a repeat of finding 2024-003 in the immediately prior year. Recommendation: Our recommendation is for management to design and implement a control in order to ensure the compliance requirement objectives are met. In particular, it is advised to implement a system of control within the institutions for refunds of credit balances to be paid to students within the 14-day timeframe. Further, management should reinforce and provide training to individuals responsible for compliance control ownership. This will help ensure that there are controls in place to ensure compliance and control ownership is established, thereby preventing or promptly identifying and rectifying instances of noncompliance and ensuring the controls operate as designed. Views of Responsible Officials: The College agrees with the recommendation provided. The College will establish and implement a formal credit balance monitoring process to ensure that Title IV credit balances are identified, monitored, and refunded within the required 14-day timeframe.