Finding Text
Finding 2023-001: Eligibility for Subsidized Direct Loans
ALN Number: 84.268
Federal Program: Federal Direct Student Loans
Federal Agency: U.S. Department of Education
Federal Award Number: P268K230616
Federal Award Year: July 1, 2022 - June 30, 2023
Pass-Through Entity: Not applicable
Repeat Finding: Not applicable
Criteria: A Direct Subsidized Loan borrower must demonstrate financial need in accordance with Title IV, Part F of the Act [34 CFR 685.200(a)(2)(i)].
Condition/Context: For 2 of the 40 students tested for eligibility, the students received subsidized direct loan disbursements when their financial need was $0 based on the student expected family contribution (EFC) being in excess of the cost of attendance. Review of the College's student population for the 2022-2023 academic year was completed and it determined there were no other students that received need based financial aid in excess of their financial need.
Cause: Determination of student aid for their first term was completed with the EFC indicating $0 in the student aid packaging system in error along with the incorrect amount of weeks and months in academic year, resulting in the student receiving a subsidized loan disbursement. In the following student semester, the EFC, weeks, and months in academic year was corrected in the system and the student award for that term did not disburse a subsidized loan disbursement.
Effect: Students received subsidized direct loans when not eligible based on student financial need. The students tested could have been awarded unsubsidized direct loans in accordance with the eligibility for unsubsidized direct loans.
Questioned Costs: Questioned costs for the two students tested is $2,667 of subsidized direct loans. Sample was not statistically valid.
Recommendation: The College should ensure that all EFC information from the ISIR is entered in to the student aid packaging system before the student aid award is calculated.
Views of Responsible Officials and Planned Corrective Actions: The College agrees with this finding. In review of the student records, the student aid packaging system at the time of aid determination indicated an EFC of $0 and months and weeks in academic year being zero. However, the FASFA was completed and the ISIR EFC amount was known at the time of the packaging and loan issued due to the cost of attendance not calculating correctly at time of packaging. The student aid packaging system parameters ensure that if need amount is $0 the system will stop a subsidized direct loan from being awarded. The weeks and months in academic year information was corrected in their next term and a subsidized loan was not awarded. Error appears related to only their first loan issued.
The allowance of subsidized loans was due to user error because the months and weeks enrolled in academic year were showing as zero. The College has re-trained its staff on the sequence of processing and ensure that inputs for months and weeks in academic year are correct. The College also worked with their student information system to ensure the set up for academic year definitions for cost of attendance calculations are set to be automatic for proper calculations. The College made an internal report in order to review all student financial need for the 2022-2023 academic year in February 2024 and determined there were no additional students awarded need based aid in excess of their financial need. The College will continue to use this report every term to review need. For the 2 students that received subsidized loans in error, their loans were refunded in March 2024.