Finding Text
Federal 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 ? Loan Disbursement 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 ED; 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 borrowers did not receive a loan disbursement notification or the University was unable to provide a copy of the loan disbursement notification sent to the student. Cause: Administrative oversight with respect to loan disbursement notifications. Effect or Potential Effect: Students were not properly notified of loan disbursements and/or their right to cancel/decline loan awards. Questioned Costs: None. Context: For 3 of 25 students selected for testing, the University was unable to provide documentation supporting appropriate loan disbursement notification. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend the University enhance its procedures over loan disbursement notifications to ensure that such notifications are sent to student and/or parent borrowers within the required timeframe.