Finding 537519 (2024-001)

Finding 2024-001 – Loan Disbursement Notification Cluster: Student Financial Assistance Cluster Awarding Agency: Department of Education Award Name: Federal Direct Student Loans Award Year: July 1, 2023 – June 30, 2024 Assistance Listing Number: 84.268 Pass-through Entity: Not applicable Criteria Under 34 CFR 688.165 (a), except in the case of a post-withdrawal disbursement made in accordance with 34 CFR 668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal Perkins Loan, or TEACH Grant program funds, the institution must notify the student or parent of (i) the anticipated date and amount of the disbursement; (ii) the student's or parent's right to cancel all or a portion of that loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds or TEACH Grant proceeds returned to the Secretary; and, (iii) the procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement. The institution must provide the notice no earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account, if the institution obtains affirmative confirmation from the student. Condition Through testing of 25 individual federal student financial aid award disbursements, we selected 20 direct loan disbursements to students for testing. We noted that for all 20 selections, the students did not receive a notification containing: i) anticipated date and amount of the Direct Loan disbursement, ii) their right to cancel and, iii) the procedures and time by which the Direct Loan could be canceled. Cause The University relied on an automated process whereby the loan disbursement notice was to be sent one day after a loan disbursement posts to a student’s account. As a result of our audit procedures, the University identified the system rules that initiate the notice were not reinstalled after script updates were made, resulting in the notice not being sent to all Direct Loan recipients during the fiscal year. Effect If a student is not provided with timely notifications specific to Direct Loans, they may not be able to decline the funding, if they so choose, in a timely manner. Questioned Costs None. Recommendation We recommend management annually review the associated system rules to confirm notices will be sent as required. Management’s Views and Corrective Action Plan Management’s view and corrective action plan are included at the end of this report.