Finding 398266 (2023-002)

Finding 2023-002 - Non-Compliance with Financial Need Requirements for Subsidized Direct Loans in Non-Standard Semesters Grantor: U.S. Department of Education Program: Student Financial Assistance Cluster Assistance Listing #: 84.268 Award Title: Federal Direct Student Loan Program Award Years: 7/2022 – 6/2024 Criteria 34 CFR 685.200. 2(i) Borrower eligibility A Direct Subsidized Loan borrower must demonstrate financial need in accordance with title IV, part F of the Act. 20 U.S. Code § 1087kk - Amount of need Except as otherwise provided therein, the amount of need of any student for financial assistance under this subchapter (except subparts [1] 1 or 2 of part A of this subchapter) is equal to— (1)the cost of attendance of such student, minus (2)the expected family contribution for such student, minus (3)estimated financial assistance not received under this subchapter (as defined in section 1087vv(j) of this title). Condition Of the population of students who were awarded and received federal student financial assistance during the fiscal year, 25 students were selected for eligibility testing. Of the 25 students selected, one instance was noted in which a student was awarded a subsidized direct loan in excess of their estimated need. This instance occurred in the Spring 2023 non-standard semester. Cause The instance pertains to a system error in which the student information system inappropriately defaults estimated family contribution (EFC) to zero for direct loan recipients during the non-standard Spring 2023 semester, rather than allocating the EFC for the students period of enrollment. This resulted in the student receiving a subsidized direct loan they would not be eligible to receive. Effect Awarding subsidized direct loans to students without financial need resulted in disbursement of needbased federal aid to an ineligible student. Questioned Costs $2,474 Recommendation We recommend that the University update their student information system configuration to appropriately account for EFCs based on the student’s enrollment (on a 12 month enrollment period for students enrolled in the non-standard Spring semester) to ensure federal student financial assistance is awarded to eligible students. Management’s Views and Corrective Action Plan Management’s response is reported in management’s view and corrective action plan included at the end of this report.