Finding Text
2024-005 Significant Deficiency: Return to Title IV Funds (U.S. Department of Education, William D.
Ford Direct Loan Program, ALN #84.268; Federal Pell Grant Program, ALN #84.063; Federal
Supplemental Opportunity Grant Program, ALN #84.007; and TEACH Grant Program, ALN #84.379)
Criteria: In accordance with 34 CFR 668.22(i), unearned funds returned by the institution or the
student, as appropriate, must be credited to outstanding balances on Title IV loans made to the
student or on behalf of the student for the payment period or period of enrollment for which a
return of funds is required. Those funds must be credited to outstanding balances for the payment
period or period of enrollment for which a return of funds is required in the following order: (i)
Unsubsidized Federal Direct Stafford loans, (ii) Subsidized Federal Direct Stafford loans, (iii) Federal
Direct PLUS received on behalf of the student. If unearned funds remain to be returned after
repayment of all outstanding loan amounts, the remaining excess must be credited to any amount
awarded for the payment period or period of enrollment for which a return of funds is required in
the following order: (i) Federal Pell Grants, (ii) Iraq and Afghanistan Service Grants, (iii) FSEOG
Program aid, (iv) TEACH Grants.
Statement of Condition: During the audit, it was noted that the University returned funds in an
incorrect sequence during the Return to Title IV Funds process upon student withdrawal.
Questioned Costs: There is no known monetary error as the mistake causes a misclassification in
type of award, but net award amount is not affected.
Perspective Information: The audit included a detailed testing of 2 student files, of which this
significant deficiency applies to 2, indicating an error rate of 100%. No other possible students to
which this issue could have affected exist beyond those tested during the audit, as all withdrawn
students were examined.
Cause and Effect: For noted withdrawal calculations, the institution applied the percentage of
earned aid to each type of disbursed aid individually, returning the remaining portion of each type
of aid. However, the guidance stipulates that funds should be returned in a set order, returning the
full amount of each type before moving to the next.
In the return to Title IV process for the first student, the institution calculated an earned percentage
of 50.0% based upon completed days. The student had been disbursed both subsidized and
unsubsidized loans for the term. The director applied the 50.0% to each subsidized and unsubsidized
awards to determine the monetary amounts of earned aid, returning the remaining $495 of
subsidized and $866 unsubsidized loan disbursements to G5. The appropriate treatment would have
been to return the full unearned portion of aid from the unsubsidized award.
In the return to Title IV process for the second student, the institution calculated an earned
percentage of 42.2% based upon completed days. The student had been disbursed both Pell and
FSEOG for the term. The director applied the 42.2% to each Pell and FSEOG awards to determine the
monetary amounts of earned aid, returning the remaining $2,156 of Pell and $146 of FSEOG
disbursements to G5. The appropriate treatment would have been to return the full unearned
portion of aid from the Pell award.
Recommendation: The University should ensure that funds are returned in the prescribed sequence
in the determination of the return of aid as designated by the Compliance Supplement and the
Student Financial Aid Handbook.
View of Responsible Officials: The University’s Vice President of Finance and Financial Aid
Administrator recently attended a week-long workshop and received training to complete the R2T4
calculation via COD. The training was received after the infringements and a plan has been adapted
to utilize COD for future R2T4 calculations and sequence. The school calendar has been updated in
COD for correct future calculations and sequence.