Finding Text
Finding 2025-012 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Early Disbursement of Pell Grant Funds (Material Weakness): Information on the federal program – Federal Direct Student Loans, ALN 84.268, June 30, 2025; Federal Pell Grant Program, ALN 84.063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, ALN 84.007, June 30, 2025; Federal Work-Study Program, ALN 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (b)(1), institutions may disburse Title IV funds no earlier than 10 days before the first day of classes of a payment period. Per 34 CFR § 668.164 (a), a disbursement occurs when the institution credits a student’s account with title IV funds or pays the student directly. Posting Pell funds more than 10 days before the start date violates federal disbursement timing rules. Condition – During our review of Pell Grant disbursements, we identified that the University drew down and credited Pell Grant funds to student accounts more than 10 days prior to the start of the payment period. Specifically, twenty-nine (29) out of sixty (60) students tested had Pell funds credited 11 days before the payment period start date. As a result, Title IV funds were posted to student ledgers before students became eligible to receive the disbursements under federal disbursement timing requirements. Cause – The exception appears to have resulted from incorrect or premature disbursement dates, lack of coordination between Financial Aid and the Business Office regarding the approved disbursement calendar and insufficient controls. Effect – Pell funds being disbursed earlier than allowed may impact the University’s administrative capability under 34 CFR § 668.16, increasing risk of funds being provided to students who may never begin attendance, improper cash management and potential liabilities or repayment of funds. Questioned Costs - $0 Repeat Finding - Yes Auditor’s Perspective – A failure rate of 29 out of 60 students (48.3%) represents a significant and systemic breakdown in the University’s Title IV disbursement controls. This is not an isolated occurrence as it indicates that nearly half of all students tested received Pell disbursements earlier than permitted. Such a high exception rate suggests that the University’s disbursement schedule, system configuration, and internal oversight processes are not functioning as required, and that the issue is likely affecting all Title IV disbursements, not just the students sampled. Auditor’s Recommendation – The University should review and correct disbursement calendars, strengthen system controls, and monitor disbursements regularly. View of Responsible Officials – Management agrees with the finding. See the accompanying Corrective Action Plan for the University's planned corrective actions, responsible officials, and implementation dates.