Finding Text
Finding 2022-004: Disbursements to or on Behalf of Students - Material Weakness and Noncompliance Federal Program: Student Financial Assistance Cluster - Federal Pell Grant Program, Federal Direct Student Loan Program Federal Agency: U.S. Department of Education Pass-Through Entity: Not applicable Assistance Listing Number: 84.063 and 84.268 Federal Award Year: June 30, 2022 Criterion: An institution must pay credit balances to students no later than 14 days after the balance occurred if the balance occurred after the first day of class of that payment period, or 14 days after the first day of class if the balance occurred on or before the first day of class. When a valid waiver has been obtained, an institution must pay the remaining balance on loan funds by the end of the loan period and any remaining other Title IV program funds by the end of the last payment period in the award year for which the funds were awarded (34 CFR 668.164 and 668.165). Distributions to first time borrowers should be 30 days after the first day of classes (34 CFR 685.303). Condition and Context: For 13 of the 25 students selected for testing, a credit balance was late being paid back to the student, a waiver was not obtained, and the College is on the reimbursement payment method. For one of the 25 students selected for testing, disbursement was made to the first time student prior to 30 days after the first day of classes. Our sample was not statistically valid. Cause and Effect: The College experienced several personnel changes in the financial aid office and did not have proper controls in place to monitor these requirements. As a result, the College was holding funds that needed to be returned to the student and not strictly adhering to the rules for first time borrowers. Recommendation: We recommend the College develop sufficient, appropriate internal controls over the disbursement of Title IV funds to students in a timely manner when a credit balance is created on their account and adhere to disbursement rules to first time students. Management Response: Management agrees with this finding. The Office of Financial Aid will continue to run student disbursements on a daily basis. The Vice President of Finance, Operations, and Information Technology and the Director of Financial Operations will enforce policies and procedures to ensure the student refund process is performed and reviewed on a timely basis.