Federal programs: Federal Pell Grant Program; Federal Direct Loan Program CFDA Number: 84.063 / 84.268 Federal award identification number: P063P214207 / P268K224207 Grant period: August 1, 2021 to July 31, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Compliance / Internal Control Finding Type: Material Weakness Compliance requirement: Special tests and provisions ? Return of Title IV Funds Condition and context In testing compliance with the return of Title IV requirement applicable after a student begins attendance, we selected a sample of four (4) participants of the Title IV Student Financial Assistance (SFA) programs who received $5,547 in SFA funds from a population of ten (10) students who withdrew, dropped out, or failed to attend to the Institution, who received $12,918 in Title IV (SFA) funds. Our sample was a statistically valid sample. We noted in two (2) cases of our sample (50%) that the Institution failed to determine that the student withdrew within 14 days after the student?s last date of attendance as determined by the Institution from its attendance records. Also, in testing compliance with the return of Title IV requirement applicable for a student who does not begin attendance, we selected a sample of four (4) participants of the Title IV Student Financial Assistance (SFA) programs who received $4,557 in SFA funds from a population of nine (9) students who received $28,024 in Title IV (SFA) funds. We reviewed their academic and enrollment records (including class attendance records) to ascertain whether the students sufficiently completed the payment or enrollment period to earn the Title IV funds received. The sample was a statistically valid sample. We noted the following deficiencies: a. In one case of the four students selected (25%) we noted that the Institution failed to perform an administrative withdrawal because the student stopped attending the enrolled courses. During the term the student was granted an incomplete grade before attending 60% of the payment period, the student failed to comply with the incomplete course requirements. As a result, the Institution failed to return Title IV funds for the portion of aid not earned by the student. The amount owed to the USDE for this case is $439. b. In one case (25%) the Institution failed to perform an administrative withdrawal for a student that stopped attending the enrolled courses. As a result, the Institution failed to return Title IV funds for the portion of aid not earned by the student. The amount owed to the USDE for this case is $581. c. For the two cases (50%) mentioned in items a and b, the Institution failed to determine that the student withdrew within 14 days after the student?s last date of attendance as determined by the Institution from its attendance records. d. For the two cases (50%) mentioned in items a and b, the Institution failed to return Title IV funds within the 45 days? timeframe. Criteria The Volume 5 - Withdrawals and the Return of Title IV Funds 2021?2022 of the Financial Student Aid Handbook establishes in page 5-72 that if a student who began attendance and has not officially withdrawn fails to earn a passing grade in at least one course offered over an entire period, the institution must assume, for Title IV purposes, that the student has unofficially withdrawn, unless the institution can document that the student completed the period. Keep in mind that a grade of ?incomplete? is not considered a passing grade or successful completion. Dear Colleague Letter GEN-04-03 (Revised November 2004) ? states in item 2 that an institution may have a grading policy as follows: F (Failing) Awarded to students who complete the course but fail to achieve the course objectives. U (Unauthorized Incomplete) Awarded to students who did not officially withdraw from the course, but who failed to participate in course activities through the end of the period. It is used when, in the opinion of the instructor, completed assignments or course activities or both were insufficient to make normal evaluation of academic performance possible. A student who did not officially withdraw and did not receive either a passing grade or an `F? in at least one course must be considered to have unofficially withdrawn. Important: Compliance audits and program reviews may examine whether a school accurately assigns failing grades to students if the school uses its grading policy to determine whether a student with failing grades has unofficially withdrawn. 34 CFR 668.22 ?Treatment of title IV funds when a student withdraws?, section (a) General, (1) states that when a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student?s withdrawal date in accordance with paragraph (e) of this section. Also, in (b) ?Withdrawal date for a student who withdraws from an institution that is required to take attendance?, section (1) states that for purposes of this section, for a student who ceases attendance at an institution that is required to take attendance, including a student who does not return from an approved leave of absence, as defined in paragraph (d) of this section, or a student who takes a leave of absence that does not meet the requirements of paragraph (d) of this section, the student?s withdrawal date is the last date of academic attendance as determined by the institution from its attendance records and section (2) states that an institution must document a student?s withdrawal date determined in accordance with paragraph (b)(1) of this section and maintain the documentation as of the date of the institution?s determination that the student withdrew. 34 CFR 668.22 (j), ?Timeframe for the return of title IV funds?, establishes that: (1) An institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution?s determination that the student withdrew. The timeframe for returning funds is further described in ? 668.173(b); (2) For an institution that is not required to take attendance, an institution must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the - (i) Payment period or period of enrollment, as appropriate. 34 CFR 668.173 (b), ?Timely return of title IV, HEA program funds?, establishes that in accordance with procedures established by the secretary, an institution returns unearned title IV, HEA program funds timely if - (1) the institution deposits or transfers the funds into the bank account it maintains under ? 668.163 no later than 45 days after the date it determines that the student withdrew. Dear Colleague Letter GEN-04-03 (Revised November 2004) - Subject: Return of Title IV Aid states that Institutions are expected to have procedures to determine when a student's absence is a withdrawal. Institutions that are required to take attendance are expected to have a procedure in place for routinely monitoring attendance records to determine in a timely manner when a student withdraws. Except in unusual instances, at an institution that is required to take attendance, they would expect that the date of the institution's determination that the student withdrew would be no later than 14 days after the student's withdrawal date - the last date of academic attendance as determined by the institution from its attendance records (34 CFR 668.22(b)(1)). Cause The Institution?s internal controls for tracking and calculating the return of title IV funds of the students who withdrew, drop out or stopped attending the Institution failed to identify and process these cases as required and on a timely basis. Effect The failure to correct these deficiencies which have been cited in prior audits may result in the Institution being referred to the Department?s Administrative Actions and Appeals Service Group (AAASG) for possible adverse action. Such action may include a fine, or the limitation, suspension, or termination of the eligibility of the Institution. Such action may also include the revocation of the institution?s program participation agreement (if provisional), or, if the Institution has an application pending for renewal of its certification, denial of that application. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding A finding related to this compliance requirement was included in the prior year audit as Finding No. 2021-003. Recommendations We recommend the Institution to improve its procedures to ascertain that the return of Title IV funds requirements is properly followed and unearned funds are properly calculated and returned timely to the USDE. Also, the Institution should consider creating a position of compliance officer. Educational institutions must meet and observe a wide variety of guidelines and regulations set by both government agencies and nongovernmental associations to receive financial support and maintain accreditation. A school's compliance officer spreads awareness of policies, coordinates programs to promote the observation of guidelines and reports to a top-level administrator. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.