Finding Text
Federal Program Information: Federal Direct Student Loans (ALN 84.268)
Criteria or Specific Requirement: N. Special Test and Provisions – Disbursements To or On Behalf of Students - Loan Disbursement Notifications: 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 or TEACH Grants. The Federal Student Aid Handbook further clarifies that in general, there are two types of notifications a school must provide: (1) a general notification to parent Direct PLUS borrowers and all students receiving Federal Student Aid (“FSA”) funds, and (2) a notice when FSA loan funds or TEACH Grant funds are credited to a student’s account.
Condition: Certain parent PLUS loan borrowers were not notified of loan disbursements to their dependent’s account.
Cause: Administrative oversight.
Effect or Potential Effect: The College was not in compliance with loan notification requirements.
Questioned Costs: None.
Context: For 5 of 40 Direct Loan disbursements tested, the College was unable to provide documentation showing that a notification was sent to the parent borrower.
Identification as a Repeat Finding: There was no similar finding identified during the prior year.
Recommendation: We recommend that the College enhance its procedures over loan notifications to ensure timely and accurate notification to borrowers.
Views of Responsible Officials: The College agrees with this finding.
The Financial Aid Office has updated the procedure to clearly specify a separate notice to all parents who borrow using the Parent Plus. Each borrowing parent will receive a notification mailed to the address used on the Parent Plus application. The current financial aid procedures were updated in spring of 2022 and carried out successfully.