Finding Text
FINDING 2024-003 – Federal Direct Loan Eligibility
Federal Agency: U.S. Department of Education; Office of Federal Student Aid
Pass through Entity: Not applicable
Program Name: Federal Direct Student Loan Program
ALN and Program Expenditures: 84.268 ($709,913)
Award Number: P268K243315
Federal Award Year: July 1, 2023 to June 30, 2024
Questioned Costs: N/A
Condition Found:
The amount of subsidized Federal Direct Loans awarded was incorrect for one of the twelve students in our sample that received Federal Direct Loans. In addition, the student was eligible for additional unsubsidized funds.
Criteria:
The annual subsidized Federal Direct Loan limit is $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors. For students who are considered independent for financial aid purposes the amount of unsubsidized Federal Direct loans are $6,000 for freshman and sophomores, and $7,000 for junior and seniors
Cause:
The student had several transfer credits that were not considered when determining the grade-level of the student for Federal Direct Loan awarding purposes.
Possible Asserted Effect:
The student in question was eligible to receive a $5,500 subsidized Federal Direct Loan but was only offered $4,500. In addition, the student in question was eligible to receive $7,000 in unsubsidized Federal Direct Loan but was only offered $6,000.
Repeat Finding:
There was not a similar finding for the year ended June 30, 2023.
Statistical Sampling:
The sample was not intended to be, and was not, a statistically valid sample.
Recommendation:
An additional $1,000 of subsidized and unsubsidized Federal Direct Loan funds could be offered to the student. If the student declines the additional funds, $1,000 of the unsubsidized loan should be reclassified as a subsidized loan. Procedures should be improved to ensure that all eligible credit hours are included when determining subsidized loan eligibility.
Management Response:
The Interim Student Financial Aid Director has requested a repackage of aid by the third-party financial aid administrator. Procedures will be improved to ensure that credit hours are reviewed before awarding aid.