Federal programs: Federal Pell Grant Program; Federal Direct Loan Program
Finding Type: Significant Deficiency
Compliance requirement: Special tests and provisions - Return of Title IV Funds:
Condition and context.
In testing compliance with the return of Title IV requirement applicable after a student begins
attendance, we selected a sample of three (3) participants of the Title IV Student Financial
Assistance (SFA) programs who received $5,389.00 in SFA funds from a population of twelve
(12) students who withdrew, dropped out, or failed to attend to the Institution, who received
$21,167.00 in Title IV (SFA) funds. Our sample was a statistically valid sample.
We noted in two (2) cases of our sample that the Institution failed to determine that the student
withdrew within 14 days after the student's last date of attendance as determined by the Institution
from its attendance records.
Criteria
Withdrawals and the Return of Title IV Funds 2027-2022 of the Financial Student Aid Handbook
(Volume 5) establishes that if a student who began attendance and has not officially withdrawn
fails to earn a passing grade in at least one course offered over an entire period, the institution
must assume, for Title IV purposes, that the student has unofficially withdrawn, unless the
institution can document that the student completed the period. Keep in mind that a grade of
"incomplete" is not considered a passing grade or successful completion.
Dear Colleague Letter GEN-04-03 (Revised November 2004) — states in item 2 that an institution
may have a grading policy as follows: F (Failing) Awarded to students who complete the course
but fail to achieve the course objectives. U (Unauthorized Incomplete) Awarded to students who
did not officially withdraw from the course, but who failed to participate in course activities through
the end of the period. It is used when, in the opinion of the instructor, completed assignments or
course activities or both were insufficient to make normal evaluation of academic performance
possible.
A student who did not officially withdraw and did not receive either a passing grade or an 'F' in at
least one course must be considered to have unofficially withdrawn. Important: Compliance audits
and program reviews may examine whether a school accurately assigns failing grades to students
if the school uses its grading policy to determine whether a student with failing grades has
unofficially withdrawn.
34 CFR 668.22 "Treatment of title IV funds when a student withdraws", section (a) General, (1)
states that when a recipient of title IV grant or loan assistance withdraws from an institution during
a payment period or period of enrollment in which the recipient began attendance, the institution
must determine the amount of title IV grant or loan assistance that the student earned as of the
student's withdrawal date in accordance with paragraph (e) of this section.
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Schedule of Findings and Questioned Costs (continued)
July 31, 2023
Also, in (b) "Withdrawal date for a student who withdraws from an institution that is required to
take attendance", section (1) states that for purposes of this section, for a student who ceases
attendance at an institution that is required to take attendance, including a student who does not
return from an approved leave of absence, as defined in paragraph (d) of this section, or a student
who takes a leave of absence that does not meet the requirements of paragraph (d) of this section,
the student's withdrawal date is the last date of academic attendance as determined by the
institution from its attendance records and section (2) states that an institution must document a
student's withdrawal date determined in accordance with paragraph (b)(1) of this section and
maintain the documentation as of the date of the institution's determination that the student
withdrew.34 CFR 668.22 (j), "Timeframe for the return of title IV funds", establishes that: (1) An
institution must return the amount of title IV funds for which it is responsible as soon as possible
but no later than 45 days after the date of the institution's determination that the student withdrew.
The timeframe for returning funds is further described in § 668.173(b); (2) For an institution that
is not required to take attendance, an institution must determine the withdrawal date for a student
who withdraws without providing notification to the institution no later than 30 days after the end
of the earlier of the - (i) Payment period or period of enrollment, as appropriate.
34 CFR 668.173 (b), "Timely return of title IV, HEA program funds", establishes that in accordance
with procedures established by the secretary, an institution returns unearned title IV, HEA
program funds timely if - (1) the institution deposits or transfers the funds into the bank account it
maintains under § 668.163 no later than 45 days after the date it determines that the student
withdrew.
Dear Colleague Letter GEN-04-03 (Revised November 2004) - Subject: Return of Title IV Aid
states that Institutions are expected to have procedures to determine when a student's absence
is a withdrawal. Institutions that are required to take attendance are expected to have a procedure
in place for routinely monitoring attendance records to determine in a timely manner when a
student withdraws. Except in unusual instances, at an institution that is required to take
attendance, they would expect that the date of the institution's determination that the student
withdrew would be no later than 14 days after the student's withdrawal date - the last date of
academic attendance as determined by the institution from its attendance records (34 CFR
668.22(b)(1)).
Cause
The Institution's internal controls for tracking and calculating the return of title IV funds of the
students who withdrew, drop out or stopped attending the Institution failed to identify and process
these cases as required and on a timely basis.
Effect
The failure to correct these deficiencies which have been cited in prior audits may result in the
Institution being referred to the Department's Administrative Actions and Appeals Service Group
(AAASG) for possible adverse action. Such action may include a fine, or the limitation,
suspension, or termination of the eligibility of the Institution. Such action may also include the
revocation of the institution's program participation agreement (if provisional), or, if the Institution
has an application pending for renewal of its certification, denial of that application.
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Schedule of Findings and Questioned Costs (continued)
July 31, 2023
Questioned costs
Less than $25,000, if any.
Identification as a Repeat Finding
A finding related to this compliance requirement was included in the prior year audit as Finding
No. 2021-003.
Recommendations
We recommend the Institution to improve its procedures to ascertain that the return of Title IV
funds requirements is properly followed and unearned funds are properly calculated and returned
timely to the USDE. Also, the Institution should consider creating a position of compliance officer.
Educational institutions must meet and observe a wide variety of guidelines and regulations set
by both government agencies and nongovernmental associations to receive financial support and
maintain accreditation. A school's compliance officer spreads awareness of policies, coordinates
programs to promote the observation of guidelines and reports to a top-level administrator.
Views of Responsible Officials
Refer to the Institutional comments included in the Corrective Action Plan.
Institutional Comments on Findings and Recommendations:
Compliance Requirements – Applicable After a Student Begins Attendance:
The institution agrees with the auditors on this finding in which there were two (2) cases where
the auditors noted that the institution failed to determine that the students withdrew within fourteen
(14) days after the student’s last day of attendance.
In one (1) of the two (2) cases the Date of Determination was twenty-two (22) days after the Last
Day of Attendance and in the second case, the Date of Determination was Three (3) days after
the Last Day of Attendance.
All funds due to the Department, (for the first case $682.00 of Unsub. Direct Loan funds and in
the second case $974.22 of Federal Pell Grant funds), were returned within the forty-five (45)
days required timeframe as of the Date of Determination of each case.
This process was evidenced to the auditors for their records.
Actions Taken or Planned:
The institution is fully aware of the Return of Title IV funds (R2T4) reporting requirements and
deadlines.
The issue related to this finding was identified as a lack in some Faculty notifying student
absences within the fourteen (14) day timeframe to process an R2T4 in a timely manner as
required.
Although this issue was already discussed with them by the Dean of Academic Affairs, an
additional follow up meeting would be held to remind them of the importance in monitoring student
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Schedule of Findings and Questioned Costs (continued)
July 31, 2023
attendance and notifying student absences to the Registrar office within the required timeframes
to fully comply with the R2T4 reporting requirements.
Status of Corrective Actions on Prior Findings:
The issue as related to this finding occurred in the past audit.