Finding Text
Findings for the year ended June 30, 2023 2023-001 FEDERAL DIRECT STUDENT LOANS Federal Assistance Listing Number: Various; Student Financial Aid Cluster, Department of Education Criteria According to the Department of Education 2022-2023 Federal Student Aid Handbook Volume 3 Chapter 5, “Direct Loan Periods and Amounts,” the minimum period for which a school may originate a Direct Loan varies depending on the school’s academic calendar: For credit-hour programs with standard terms (semesters, quarters, or trimesters), or with nonstandard terms, the minimum loan period is a single academic term. For example, if a student will be enrolled in the fall semester only and will skip the spring semester, you may originate a loan with a loan period that covers only the fall term. The loan amount must be based on the reduced costs and EFC for that term, rather than for the full academic year. Observation/Condition/Context The College over-awarded and over-disbursed Direct Subsidized and Direct Unsubsidized Loans to one student out of forty tested. The College originated and disbursed Direct Subsidized and Direct Unsubsidized Loans for a full academic year when the student only enrolled in one semester. Questioned Cost The College awarded $2,250 more in Direct Subsidized and $4,000 more in Direct Unsubsidized than was required. Cause/Effect A manual adjustment to the student’s financial aid packaging was required. Due to the manual processing, a flag on the student’s account did not appear when the student was over-awarded, and the College did not have a process in place to catch the error outside of the system flag, which resulted in the College over-awarding the student Direct Subsidized and Direct Unsubsidized Loans. Recommendation We recommend that the College implement a procedure to review manually processed financial aid packaging.