Finding 540600 (2024-001)

Federal Program Student Financial Assistance Cluster ALNs 84.268 Federal Agencies Department of Education Federal Award Year Ranges from July 1, 2023 – June 30, 2024 Compliance Requirement Eligibility Finding Type Noncompliance and Significant Deficiency Criteria or Requirement 34 CFR 685.203 pertains to loan limits under the William D. Ford Federal Direct Loan Program. It specifies the loan limits that undergraduate and graduate students can borrow annually and for an academic year. The limits vary based on the student's year in school, academic program, and dependency status. Additionally, in accordance with Federal requirements, the University shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition Found, including perspective For one out of the 40 students sampled to test that the University adhered to the loan limits, a fourth-year graduate dental student in a residency program received Federal Direct Loans exceeding the aggregate loan limits by $47,079. Annually, the University sends a Financial Aid History (FAH) file to the US Department of Education to request the total outstanding loans and Federal Pell Grant history for students. However, this student was not included on the FAH file because their social security number and/or date of birth were missing from the PeopleSoft student system when the report was generated, and therefore outstanding loan activity for this student was not provided by the US Department of Education. As a result, the University was unaware that the Federal Direct Loans awarded to this graduate student during the 2023-2024 academic year caused the student to receive Federal Direct Loanas that exceeded the aggregate loan limit. During the 2023-2024 academic year, the School of Dental Medicine did not have certain reports to identify students with a federal loan aggregate related issue. The Office of Admissions and Financial Aid had a report for students in the undergraduate and graduate careers (excluding the Dental Medicine professional Primary Academic Program). The Office of Admissions and Financial Aid added the School of Dental Medicine staff as a recipient on this report to assist them in identifying students with an ISIR code indicating students that are approaching or have already exceeded the Federal Direct Loan aggregate limits for review. The University’s School of Dental Medicine had 26 students enrolled in a residency program during the 2023-2024 academic year that received $758,572 in Federal Direct Unsubsidized Loans. We expanded our sample to test the loan limits for these dental graduate students that received a code on the ISIR for being near or approaching the aggregate Federal Direct Loan limit and identified seven additional students that exceeded the aggregate loan limit totaling $60,403. Cause and Effect As a result of certain information missing from the PeopleSoft student system when the annual FAH file was submitted to the Department of Education and the School of Dental Medicine not having reports in place to identify students with a federal loan aggregate related issue, the School of Dental Medicine was not able to identify Dental Medicine students who were approaching or had exceeded the Federal Direct Loan aggregate limits. The School of Dental Medicine did not have effective controls in place to validate the aggregate loan limits for Federal Direct Loans. Questioned Costs $107,482. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding No. Recommendation We recommend that the University enhance the monitoring of students who are approaching their Federal Direct Loan aggregate loan limits to ensure compliance with federal regulations. Views of Responsible Officials Management agrees with the finding and the following corrective actions are being taken to minimize future risks. The University will work with the Department of Education to resolve the overpayments. The Aggregate Overpay Checklist report is now provided to and reviewed by the School of Dental Medicine, to properly address any Federal Direct Loans that may exceed the aggregate loan limit before the award is disbursed.