Finding Text
Finding 2025-016 – U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Federal Direct Unsubsidized Loan Aggregate Limit Exceeded (Significant Deficiency): 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 – In accordance with 34 CFR § 685.203, a student's eligibility for Federal Direct Subsidized and Unsubsidized Loans is subject to applicable annual and aggregate loan limits. An institution may not originate or disburse a Direct Loan that would cause a student to exceed the applicable aggregate loan limit. Additionally, 34 CFR § 668.24 requires institutions participating in Title IV programs to maintain records necessary to demonstrate compliance with federal student aid requirements and to support the eligibility and amounts of Title IV assistance awarded and disbursed to students. Institutions are responsible for reviewing available student loan history and ensuring that a student's remaining eligibility is sufficient before originating and disbursing additional Direct Loan funds. Condition – During testing of Federal Direct Loan eligibility, we noted that one student received Federal Direct Unsubsidized Loan funds that caused the student to exceed the applicable aggregate loan limit by $579. The University did not identify and resolve the student's aggregate loan limit prior to disbursing the additional loan funds. Cause – The exception appears to have resulted from insufficient review and monitoring of the student's cumulative Federal Direct Loan borrowing prior to the disbursement of additional Unsubsidized Direct Loan funds. Effect – Failure to adequately monitor aggregate loan limits resulted in the student receiving $579 in Federal Direct Unsubsidized Loan funds in excess of the applicable aggregate limit. This resulted in noncompliance with federal Direct Loan requirements and may require corrective action to restore the student's eligibility and resolve the excess loan amount in accordance with applicable federal requirements. Questioned Costs – $579 Repeat Finding – Yes Perspective – Of the 60 students selected for testing, one (1) student, or 1.67% of the sample, received Federal Direct Unsubsidized Loan funds in excess of the student's applicable aggregate loan limit. The amount exceeding the aggregate limit was $579. While the exception appears isolated based on the sample tested, monitoring annual and aggregate loan limits is an important Title IV eligibility control designed to prevent students from receiving Direct Loan funds in excess of federally established borrowing limits. Auditor's Recommendation – The University should strengthen its procedures for reviewing students' Federal Direct Loan history prior to originating and disbursing additional loan funds. Financial Aid personnel should verify each student's cumulative borrowing, applicable aggregate loan limit, and remaining loan eligibility using current NSLDS information and other applicable institutional records. The University should also review the identified student's account and take appropriate corrective action to resolve the $579 excess loan amount in accordance with federal requirements. Management should implement or strengthen supervisory review and system controls designed to identify students who are approaching or have reached applicable aggregate loan limits before additional Direct Loan funds are disbursed. 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. 42