Finding Text
Federal Program:
U.S. Department of Education:
Student Financial Aid Cluster:
Direct Loan Program, Assistance Listing 84.268
Criteria: The College must comply with 34 Section 685.203.
Condition: We tested 26 Direct Loan recipients as part of testing for eligibility, and noted 3 instances where students received an incorrect amount of Direct Loans based on their student classification, and received more Direct Loans than allowed.
Cause: The College's Information Technology (IT) system packaged the student's financial aid based on the student's classification from the Institutional Student Information Records (ISIR), instead of using the transcript. The students had filled out the ISIR incorrectly based on their classification per the College's student classification policy, causing the student to get disbursed the incorrect amount of Direct Loans.
Effect: The provisions of 34 Section 685.203 were not followed, and 3 students received more Direct Loans than which they were eligible.
Questioned Costs: 1 student was a first year by credit hours, but received the loan limits for a second year, resulting in the student receiving $1,000 more subsidized loans than they were eligible. 1 student was a second year by credit hours, but received the loan limits for a third year, resulting in the student receiving $1,000 more subsidized loans than they were eligible. 1 student was an independent second year by credit hours, but received the loan limits for a third year, resulting in the student receiving $1,000 more subsidized loans and $1,000 more unsubsidized loans than they were eligible. The total questioned costs were $4,000, with $3,000 in subsidized loans and $1,000 in unsubsidized loans.
Recommendation: We recommend that the College update procedures to use proper information for packaging and to review student classification prior to disbursing a Direct Loan to verify the student is receiving the proper amount.
View of responsible officials and planned corrective actions: The College has updated its procedure to include a report to be reviewed of credits earned to verify the amounts to be disbursed to the student is in compliance standards of the correct grade level for Direct Loans. All financial aid staff has been updated on the procedures to review the Direct Loan amounts to credits earned when packaging the student and a final approval from either the Assistant Director of Financial Aid or the Director of Financial Aid before the award letter is sent to the student.