Finding Text
2024-004. FINDING (Noncompliance with Notification Requirements on Direct PLUS Loans Disbursements)
Federal Department: U.S. Department of Education
Assistance Listing Number: 84.268
Cluster Name: Student Financial Assistance Cluster
Program Name: Federal Direct Student Loans
Award Numbers: P268K240567, P268K230567
Questioned Cost: None
Program Expenditures: $21,113,430
Cluster Expenditures: $32,781,904
Governors State University (University) did not comply with the notification requirements on Direct PLUS Loans disbursements.
CONDITION
During testing of 25 Direct Loans disbursements, we noted 2 (8%) students with Direct PLUS loans, where the parents were not properly notified. Notifications were made only to students.
CRITERIA
The Code of Federal Regulations (34 CFR 668.165) requires the University when Direct Loans are being credited to a student’s account to notify the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student’s right, or parent’s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to Department of Education; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan (a minimum of 14 or 30 days depending on confirmation process). Further, the Federal Student Aid (FSA) handbook clarified that general notification must be provided to the parent Direct PLUS borrower and all students receiving FSA funds.
CAUSE
University officials stated they were aware of the notification requirements and believed the existing process was compliant with the requirements.
EFFECT
Proper notifications protect the borrower’s rights and give the parent borrower a chance to reconsider the loan, adjust disbursements or cancel within the specified timeframe. In addition, failure to implement notification requirements represents noncompliance with federal regulations. (Finding Code No. 2024-004)
RECOMMENDATION
We recommend the University improve its procedures to ensure proper notification is made to the parent Direct PLUS borrowers.
UNIVERSITY RESPONSE
The University agrees with this finding and accepts the recommendation. The University has implemented changes to procedures to send proper notification to the parent Direct PLUS borrowers.