Finding Text
2023 – 003: Eligibility: Loan Notifications
Federal agency: U.S. Department of Education
Federal program title: Student Financial Assistance
ALN Number: 84.007, 84.033, 84.063, 84.268, 84.379
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: July 1, 2022 through June 30, 2023
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
• Other Matters
Criteria or specific requirement: 34 CFR 668.165, states that an institution must 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 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. The notification requirement for loan funds applies only if the funds are disbursed by EFT payment or master check.
Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements.
Condition: The University did not properly notify students when loans were credited to the student's ledger account.
Questioned costs: None.
Context: During our Eligibility testing of 40 students, we identified that there were 38 students that received loan disbursements however, 28 students did not receive the required notification for the Fall 2022 term loan disbursement
Cause: Due to staff turnover, Fall 2022 loan notifications were not sent to students.
Effect: Tailored award disbursement notifications inform the student or parent of the right to cancel all or a portion of that loan or loan disbursements and have the loan proceeds returned to the holder of that loan. The notifications also outline the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan.
Repeat finding: No.
Recommendation: We recommend the University evaluate its procedures around disbursements of loans and ensure that notifications of disbursements are sent and contain all the required elements outlined in the FSA handbook.
Views of responsible officials: There is no disagreement with the audit finding.