Finding Text
Finding Number:2022-004 Information on the Federal Program:Federal Agency: ED Program Name: Student Financial Assistance Cluster AL: 84.268 - Federal Direct Student Loans Federal Award Identification Number: N/A Federal Award Year: Year Ended June 30, 2022 Specific Requirement: Required by 34 CFR 668.165, an institution must notify the student, or parent, in writing of (1) the date and amount of disbursement; (2) the student?s right, or parent?s right, to cancel all or a portion of that loan; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. When funds are disbursed by electronic fund transfer and an institution does not implement an affirmative confirmation process, an institution must notify a student no earlier than 30 days before, but no later than 7 days after, crediting the student?s account of their right to cancel all or part of the loan within 30 days. Condition Found: During our audit, we noted the University did not send disbursement notification letters informing the student, or their parent, of their right to cancel all or a portion of their loan for approximately 200 Federal Direct Student Loans awarded during the Summer 2021 semester out of a total of approximately 2,500 direct loans disbursed during 2022 Context: Based on our sample, which was determined using a non-statistically based methodology, 1 of the 27 students tested who were disbursed Federal Direct Student Loans did not receive the disbursement notification letters informing the student, or their parent, of their right to cancel all or a portion of the their loan within the required timeframe. Based on our discussion with management, the disbursement notification letters were not sent for any Federal Direct Student Loan awarded during the Summer 2021 semester. Questioned Costs: None. Cause and Effect: Due to turnover in Student Financial Services Department, the disbursement notifications for the Summer 2021 semester were not sent to the students or their parents. As a result, students may not have been aware of their right to cancel their loan or the procedures and time by which the loan may be canceled. Identification as a Repeat Finding, if Applicable: A repeat of prior year finding 2021-001 Recommendation: We recommend the University implement a control procedure to ensure disbursement notification letters are sent to every student who received direct loan disbursement, within 7 days, to be in compliance with the requirement described above. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and the recommendation. See Corrective Action Plan.