Finding Text
Audit Finding Reference Number Questioned Cost
2023-002 – Annual and Aggregate Loan Limits $6,769
Federal Program and Specific Federal Award Identification
CFDA Title and Number
84.268 Federal Direct Student Loan (Direct)
Federal Award Year
June 30, 2023
Federal Agencies
U. S. Department of Education
Pass-Through Entity
Not applicable
Criteria
Title IV regulations, 34 CFR 685.203 (a) stipulates annual loan limits based upon the undergraduate student’s completed years of program of undergraduate education. The annual loan limit for a student who has not completed the 1st year of study is $3,500, 2nd year of study is $4,500 and remainder of the program is $5,500.
Title IV regulations, 34 CFR 685.203 (b) stipulates that a dependent student may receive an additional unsubsidized loan in the amount of $2,000. Students whose parents are likely to be precluded by exceptional circumstances from receiving a PLUS loan may be eligible for an unsubsidized loan beyond the base amount of $2,000.
CFR 685.203(d) stipulates the aggregate unpaid principal amount of all Direct subsidized loans made to a student but excluding the amount of capitalized interest may not exceed (1) $23,000 in the case of any student who has not successfully completed a program of study at the undergraduate level and (2) $65,500 in the case of a graduate or professional student, including loans for undergraduate study.
The total amount of Direct unsubsidized loans but excluding the amount of capitalized interest may not exceed (1) for a dependent undergraduate student, $23000, or, effective July 1, 2008, $31,000, minus any Direct subsidized loan, and (2) for an independent undergraduate or a dependent undergraduate who qualifies for additional eligibility, $57,500, minus any Direct subsidized loan.
Conditions and Context
I noted during my audit:
• two (2) students out of twenty-five (25) tested received direct loans in excess of the aggregate loan limit totaling $3,803, and
• three (3) students out of twenty-one (21) tested who received subsidized loans in excess of the annual loan limit totaling $2,966.
However, the University has made adjustments to the student’s billing statements and returned the funds to the Department of Education prior to issuance of the report.
Cause
It appears that the University did not ensure that the student was eligible to receive the loan proceeds.
Questioned Costs
For the purposes of this condition, I have questioned costs totaling $6,769 related to the Direct loan program.
Effect
The University has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. However, the University has made adjustments to the student’s billing statements and returned the funds to the Department of Education prior to issuance of the report.
Repeat Finding
No.
Management’s Response
The system is being reviewed to ensure flags are set not only from the Central Process System (CPS) on the ISIR as an alert, but to implement secondary measures in PowerFaids to flag the student’s electronic file record as part of the communication process that the counseling unit must review. Staff will be counseled, and additional training is being provided to ensure all staff are knowledgeable and conscientious of policy, review and the calculation process when determining yearly and aggregate loan limits. The University will be implementing Transfer Monitoring, which has been discussed as preparation for bringing up a new system.