Finding 529194 (2024-004)

2024-004. FINDING Failure to Notify Students and Parents Upon Disbursement of Funds Federal Agency: U.S. Department of Education Assistance Listing Numbers: 84.379; 84.268 Program Names: Student Financial Assistance Cluster - Teacher Education Assistance for College and Higher Education Grants Federal Direct Student Loans Program Expenditures: $23,575, $17,736,297 Award Numbers: P379T221351; P268K221351 Questioned Costs: None The Chicago State University (University) did not notify the students and parents upon disbursement of grant funds and loans. Conditions Found During testing of five students, who received Teacher Education Assistance for College and Higher Education (TEACH) Grants totaling $15,088, we noted one (20%) student with a grant disbursement amounting to $3,772 was notified by the University 98 days before the TEACH funds were credited to the student’s account. The sample methods used in performing this testing were not statistically valid. In addition, during testing of 40 students, who received Federal Direct Loans totaling $597,967, we noted the following: • Six (15%) students with grant disbursements totaling $60,860 were not notified by the University indicating the funds were credited to the students’ accounts. • Seven (18%) students with grant disbursements totaling $44,586 were notified 35 to 120 days before or after the Federal Direct Loan funds were credited to the students’ accounts. The sample methods used in performing this testing were not statistically valid. Evaluative Criteria The Code of Federal Regulations (Code) (34 CFR § 668.165 (a)(3)(i)) requires the University to notify students or parents in writing no earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account at the University with TEACH Grant funds and Federal Direct Loans.   Further, the Code (2 CFR § 200.303) requires the nonfederal entity receiving federal awards to establish and maintain effective internal control over the federal award to provide reasonable assurance the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls include procedures to ensure timely notification of disbursements to students receiving TEACH Grants and Federal Direct Loans. Underlying Cause University management indicated the failure to timely notify students and parents upon disbursements of TEACH Grants and Federal Direct Loans was due to a student aid simplification process that caused errors in financial aid processing. University management further indicated the Enterprise Resource Planning (ERP) System experienced a technical glitch during the process of sending notifications to students. Significance Failure to timely notify students and parents regarding grant and loan disbursements represents noncompliance with the Code. (Finding Code No. 2024-004, 2023-005, 2022-005) RECOMMENDATION We recommend the University strengthen controls to ensure timely notifications are sent to students and parents upon disbursement of grant funds and loans. UNIVERSITY RESPONSE The University agrees with the recommendation. An additional level of oversight has been added to ensure the notification of disbursement information is sent in a timely manner. The Associate Director of Financial Aid and the Director of Financial Aid will review the list of disbursements against the list of emails sent to ensure that emails are sent in a timely manner. The additional oversight will begin with the Summer 2025 disbursement based on the date of notification of the issue.