Finding Text
Finding: The University incorrectly calculated Federal Direct Subsidized Loan funds for one student resulting in an under-award. Criteria: Per 34 CFR 685.203(a)(3), a student is entitled to $5,500 in direct subsidized loans after having completed two years of undergraduate education. A student?s award limit is based on the number of years of undergraduate education completed. Condition: One of 40 students selected randomly and tested for awarding was not properly awarded. Under-award of one student by $2,950 of Federal Direct Subsidized Loans. Cause: When initially awarding the student?s direct subsidized loan, the University improperly treated the student?s TEACH grant as need-based aid and reduced the awarded amount of the subsidized loan. An additional subsidized loan was awarded for the summer term; however, there was no recalculation performed when the student dropped a course, resulting in an over-award for this term only. These two items resulted in a net under-award. Effect: Noncompliance of federal regulation of the Federal Direct Loan Program. Questioned cost: The Federal Direct Subsidized Loan award calculated by the University was $2,272. The actual amount that should have been awarded was $5,222, resulting in an under-award of $2,950. Prevalence: One student of the 40 students subjected to Federal Direct Loan testing was not properly awarded. Recommendation: Management should update its internal policies and procedures to ensure the need-based aid calculation is properly performed and reviewed and that recalculations of aid packages are performed when needed. Views of responsible officials: Management agrees with this finding.