Finding Text
Criteria: The earliest an institution may disburse SFA funds (other than FWS) (either by paying the student directly or crediting the student?s account) is 10 days before the first day of classes of the payment period or module for which the disbursement is intended (34 CFR 668.164(i)). There are two exceptions to this rule. First, institutions may not disburse or deliver the first installment of Direct Loans to first-year undergraduates who are first time borrowers until 30 days after the student?s first day of classes (34 CFR 668.164(i)(2)), unless the institution has low default rates. Condition and Context: The College disbursed funds within 30 days of the first day of class for 12 first year students out of 40 students tested. Known Questioned Costs: $124,924 Cause: Disbursements of federal aid was processed at a similar timeframe for all students, regardless of first- or second-year status. Effect: The College was out of compliance with the requirement to withhold funds for true first year students for the first 30 days after the first day of class. Recommendation: The College should ensure policies exist to withhold funds for the first 30 days of classes for true first year students. The College should also consider creating a training manual for any future new hires to learn the requirements related to federal aid scholarships.