Finding Text
Federal Program Information: Federal Direct Student Loans (ALN #84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): Special Tests and Provisions – Loan Disbursement Notification - Federal regulations (34 CFR section 668.165 (a)(2)(i)) require that the institution notify the student, or parent, in writing of (1) the anticipated 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 U.S. Department of Education; 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: Instances were identified where the required loan disbursement notification was not sent to the parent borrower.
Cause: Lack of administrative oversight with respect to loan disbursement notification requirements.
Effect or Potential Effect: Parent was not properly notified of award disbursements and/or their right to cancel/decline loan awards. timely
Questioned Costs: None.
Context: For 4 out of 40 students, the College did not send the required loan disbursement notification to the parent borrower.
Identification as a Repeat Finding: This is a repeat finding of prior year finding 2022-005.
Recommendation: We recommend the College enhance procedures over loan disbursement notifications to ensure loan notifications are sent to parent borrowers within the required timeframe.
Views of Responsible Officials: