Finding Text
Program Information: Federal Direct Student Loan Program (ALN 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Test and Provisions – Disbursements To or On Behalf of Students - Award Notification - Federal regulations (34 CFR section 668.165 (a)(6)(i)) require that the institution notify the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student’s right, or parent’s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan or the TEACH Grant payments returned to the U.S. Department of Education; 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, TEACH Grant, or TEACH Grant disbursement. Institutions that implement an affirmative confirmation process (as described in 34 CFR section 668.165 (a)(6)(i)) must make this notification to the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student’s account at the institution with Direct Loan, FPL funds, or TEACH Grants.
Condition: For certain students who received disbursements of Federal Direct Student Loan funds, the University was unable to provide evidence that the student or parent was notified of their award disbursement within the required time frame after crediting the student’s account.
Cause: Lack of internal controls and administrative oversight.
Effect or Potential Effect: Students were not properly notified of award disbursements and/or their right to cancel/decline loan awards.
Questioned Costs: None.
Context: For 60 of 60 loan disbursements tested, the University was unable to provide evidence that parents and/or students received award notifications within the required time frame.
Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2020-010 in the prior year schedule of findings and questioned costs.
Recommendation: We recommend that the University enhance its procedures and internal controls to ensure that federal awards are disbursed in accordance with federal guidelines.
Views of Responsible Officials and Planned Corrective Actions: Primarily, the University implemented a comprehensive ERP software tool, Ellucian Colleague in FY2022 going forward. The built in internal control will readily provide data on those students who are eligible for aid and notify them of their opportunity to accept or decline aid. In addition, the notification documents will be stored in the ERP system and be available to retrieve. Within 15 days after disbursements students and parents are sent an email notifying them their loan has been disbursed to their account.