Finding Text
Need Analysis and Loan Proration DEPARTMENT OF EDUCATION
ALN #: 84.268
Federal Award Identification #: 2022-2023 Financial Aid Year
Condition: Students were not appropriately awarded subsidized loans based on need. Where there was a change in the student's cost of attendance or other aid, a recalculation of need based aid was not performed to catch adjustments before a second disbursement of aid was made. One student who was in the final semester to graduate did not have loan appropriately prorated. Errors in need analysis for federal financial aid led to inaccurate awarding and disbursing need based federal financial aid.
Criteria: 34 CFR 685.203
Questioned Costs: $394
Context: Out of 60 students, one student was not awarded aid appropriately based on need analysis. The student had eligibility for subsidized loans but was not awarded up to need, totaling $438. This student was corrected during the audit. One student’s proration was done in aggregate for loans instead of individually between subsidized loans and unsubsidized loans, resulting in an overaward of subsidized loans by $394. This student was not corrected during the audit process.
Cause: Additional scholarships were added after federal aid awarded but before the second disbursement was made. The validation check before the second disbursement was made did not catch these. The proration calculation was performed based on the total of $7,500 instead of $5,500.
Effect: Incorrect allocation of subsidized versus unsubsidized which affects the amount and timing of interest the student must repay.
Identification as repeat finding, if applicable: Yes, 2022-004 and 2021-008.
Recommendation: We recommend the University set up reports in the student information system to periodically check for over or under awarding of need based federal aid. We also recommend that the student information system have notifications when a student's cost of attendance is adjusted to review need analysis and update awarding as needed. For loan proration, we recommend the University prorate remaining loans individually between subsidized and unsubsidized programs.
Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.