Finding 401872 (2023-001)

Item 2023-001 Federal Direct Loan Program Student Notification (Significant Deficiency) U.S. Department of Education Federal Direct Student Loans (Assistance Listing Number # 84.268) Compliance requirement: Special Tests and Provisions Criteria According to the Federal Register (34 CFR 668.165 (a)(3)), an institution must provide notice to a participating student no earlier than 30 days before, and no later than seven days after, crediting the student's account with Federal Direct Loan Program proceeds at the institution, if the institution does not receive affirmative confirmation from the student. Condition We noted that the Institute did not send out the required notifications regarding Federal Direct Loan Program proceeds that had been credited to participating students' accounts within prescribed timeframes in accordance with U.S. Department of Education regulations. Cause These findings appear to be due to a deficiency in internal controls. Effect or Potential Effect The effect of these findings is noncompliance with U.S. Department of Education regulations regarding special tests and provisions. Questioned Costs - None Context A total of 37 students who were credited with Federal Direct Loan Program proceeds during the year were included in the randomly selected sample of 40 participating students. Our testing noted that in the Fall and Spring semesters none of the students with Federal Direct Loan Program proceeds credited to their account were provided with the required notifications. Identification as a Repeat Finding - Yes, repeating finding of 2022-005 Recommendation We recommended in the prior year for the Institute to review and revise its procedures and to put controls in place to ensure required notifications regarding Federal Direct Loan Program proceeds are provided to participating students timely. Views of Responsible Officials and Planned Corrective Actions We agree with both the finding and the recommendation. In the Summer 2023 semester, a system was implemented to send out the required notifications regarding Federal Direct Loan Program proceeds that have been applied to a participating student's account.