Finding Text
Federal Program Information: Federal Direct Loan Program (ALN: 84.268)
Criteria or Specific Requirement
(Including Statutory, Regulatory or
Other Citation):
C. Cash Management - Institutions are permitted to draw
down Title IV funds prior to disbursing funds to eligible
students and parents. The institution’s request must not
exceed the amount immediately needed to disburse funds to
students or parents. A disbursement of funds occurs on the
date an institution credits a student’s account or pays a
student or parent directly with either student financial aid
funds or institutional funds. The institution must make the
disbursements as soon as administratively feasible, but no
later than 3 business days following the receipt of funds. Any
amounts not disbursed by the end of the third business day
are considered to be excess cash and generally are required
to be promptly returned to the U.S. Department of Education
(the “ED”) (34 CFR section 668.166(a)(1)). Excess cash
includes any funds received from the ED that are deposited
or transferred to the institution’s Federal account as a result
of an award adjustment, cancellation, or recovery. However,
an excess cash balance is allowed and considered tolerable if
that balance: (1) is less than one percent of its prior-year
drawdowns; and (2) is eliminated within the next 7 calendar
days (34 CFR sections 668.166(a) and (b)).
Condition: An instance was identified during the year in which funds
drawn were held in excess of the allowable time frame.
Cause: Administrative oversight with respect to Cash Management
compliance requirements.
Effect or Potential Effect: The University was not in compliance with Cash Management
compliance requirements.
Questioned Costs: None.
Context: During our testing, we identified 1 instance of cash held in
excess of allowable time frames for the Federal Direct Loan
Program, as noted below:
Date of Excess Cash 6/13/23
Drawdown Amount $ 4,665
Days in Excess 25
Identification of Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend the University enhance its procedures over to
ensure that excess cash is returned timely, in accordance
with federal regulations.
Views of Responsible Officials and
Planned Corrective Actions:
A turnover in personnel led to inconsistent refund processing
for the Summer 2023 semester. There are multiple terms
within the summer semester and the new personnel did not
run refund files during the first term but ran them during the
2nd term. This is when the loan disbursement was realized
and returned. Policies have been set in place outlining
disbursement dates that coincide with refund processing
dates.