Finding 1383 (2023-001)

Finding 2023-001 – Perkins Loan Recordkeeping and Retention Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Perkins Loan Program 84.038 Condition Lake Forest College had two instances where the original promissory could not be located for a student who received a Federal Perkins Loan. Criteria Uniform Grant Guidance (34 CFR 674.19(e)) states an institution shall keep the original promissory notes and repayment schedules until the loans are satisfied. If required to release original documents in order to enforce the loan, the institution must retain certified true copies of those documents. An institution shall keep the original paper promissory note or original paper MPN and repayment schedules in a locked, fireproof container. If a promissory note was signed electronically, the institution must store it electronically and the promissory note must be retrievable in a coherent format. An original electronically signed MPN must be retained by the institution for three years after all the loans made on the MPN are satisfied. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure all original loan documents are properly maintained. Questioned Costs None. Cause Attributing to human error, the College was unsuccessful in finding the original promissory notes. Over the course of the past 20 years numerous staff changes, along with transitioning from physical paper MPN’s to electronic copies has resulted in the potential misplacement of these two MPN’s. Effect Lack of retention of original promissory notes is noncompliance with Federal regulation and could result in the loss of future funding. Recommendation We recommend the College review current processes for ensuring all records are retained for students who received Federal Perkins Loans. Views of responsible officials We agree with this finding. See corrective action plan.