Finding Text
Finding 2025-018 – U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Document Required Direct Loan Entrance and Exit Counseling (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 § 685.304(a), an institution must ensure that entrance counseling is provided to first-time student borrowers of Federal Direct Subsidized and Unsubsidized Loans prior to the borrower receiving the first disbursement of a Direct Loan, as applicable. Additionally, 34 CFR § 685.304(b) requires an institution to provide exit counseling to Direct Loan borrowers shortly before the student ceases at least half-time enrollment, including when the student graduates or withdraws. When a student leaves without the institution's prior knowledge or fails to complete counseling, the institution must provide the required exit counseling information in accordance with federal requirements. Further, 34 CFR § 668.24 requires institutions to establish and maintain records sufficient to demonstrate compliance with Title IV program requirements. Condition – During testing of Federal Direct Loan requirements, we noted that the University was unable to provide documentation demonstrating completion of required loan counseling for four students, as follows: • Two (2) students did not have documentation supporting completion of required entrance counseling; and • Two (2) students did not have documentation supporting completion or provision of required exit counseling. As a result, the University was unable to demonstrate compliance with applicable Federal Direct Loan counseling requirements for the students identified. Cause – The exceptions appear to have resulted from insufficient procedures for monitoring completion of required Direct Loan entrance and exit counseling and maintaining documentation supporting compliance with federal counseling requirements. Effect – Failure to ensure and document required entrance and exit counseling results in noncompliance with Federal Direct Loan program requirements and increases the risk that student borrowers may not receive required information regarding their rights and responsibilities, repayment obligations, loan terms, and available repayment options. Questioned Costs – $0 Repeat Finding – No Auditor’s Perspective – Of the 60 students selected for testing, four (4) students, or 6.67% of the sample, did not have documentation supporting compliance with applicable Direct Loan counseling requirements. Specifically, two students lacked documentation of required entrance counseling, and two students lacked documentation supporting required exit counseling. The exceptions indicate a weakness in the University's procedures for monitoring and documenting compliance with Federal Direct Loan counseling requirements. However, based on the sample tested, the exceptions alone do not necessarily indicate a pervasive or systemic failure of the University's Direct Loan counseling process. Auditor's Recommendation – The University should strengthen its procedures for monitoring and documenting Federal Direct Loan entrance and exit counseling requirements. Financial Aid personnel should establish procedures to verify completion of required entrance counseling prior to applicable loan disbursements and to ensure that exit counseling is completed or that required counseling materials are provided within applicable federal timeframes when borrowers graduate, withdraw, or cease at least half-time enrollment. 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.