Finding Text
Federal Program Information:
Federal Direct Student Loans (ALN: 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation):
N. Special Test and Provisions – Disbursements To or On Behalf of Students – Loan Disbursement Notification - Federal regulations (34 CFR section 668.165 (a)(6)(i)) require that the institution 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 the holder of that loan or the TEACH Grant payments returned to the ED; 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, TEACH Grant, or TEACH Grant disbursement. Institutions that implement an affirmative confirmation process (as described in 34 CFR section 668.165 (a)(6)(i)) must make this notification to the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student’s account at the institution with Direct Loan or TEACH Grants. The Federal Student Aid Handbook further clarifies that in general, there are two types of notifications a school must provide: (1) a general notification to parent Direct PLUS borrowers and all students receiving Federal Student Aid (“FSA”) funds, and (2) a notice when FSA loan funds or TEACH Grant funds are credited to a student’s account.
Condition:
Certain student and parent borrowers did not receive a loan disbursement notification.
Cause:
Insufficient administrative oversight and internal controls with respect to loan disbursement notifications.
Effect or Potential Effect:
Students and/or parents were not properly notified of loan disbursements and/or their right to cancel/decline loan awards.
Questioned Costs:
None.
Context:
For 25 of 25 students selected for testing, although the University notified the students of the types of aid they could expect to receive for the academic year through award letters at the beginning of the academic year, and students are granted continuous access to view their awards through the University's student portal, the University was unable to provide documentation supporting appropriate loan disbursement notifications at the time of Direct Loan disbursement.
Identification as a Repeat Finding:
No similar findings noted in the prior year.
Recommendation:
We recommend the University enhance its internal controls and implement formal policies and procedures over loan disbursement notifications to ensure such notifications are sent to student and/or parent borrowers within the required timeframe.
Views of Responsible Officials:
The University relied on third-party technology to notify students of their disbursements without monitoring if their process was being executed. The failure stemmed from inadequate oversight of the notification process, leading to non-compliance with federal requirements for the timely and accurate notification of loan disbursements.
The University partnered with Financial Aid Services (“FAS”) in February 2025 to review the current systems and process, and devise appropriate systems, checks, and balances to address each deficiency in our financial aid processes and personnel.
In addition, as part of the University’s transition of its ERP system from Jenzabar to Colleague, Financial Aid will be transition to Ellucian Colleague for financial aid management.
University officials are committed to rectifying this deficiency through significant enhancements to our notification processes and technological infrastructure. The systematic integration of notification with the actual disbursement function via Ellucian Colleague represents a robust solution to ensure compliance. By handling this process internally, we ensure greater control, reliability, and compliance with federal regulations. Regular audits of the disbursement and notification process will be implemented to guarantee that our procedures remain in alignment with federal requirements and best practices. This proactive approach ensures that all loan disbursements are properly managed and communicated, safeguarding both our students' financial interests and the university's compliance status.
The university has already begun to amend procedures to ensure that all loan disbursements are accompanied by timely and accurate notifications. The Office of Financial Aid will maintain detailed records showing compliance with these notifications. The integration of Ellucian Colleague will automate the notification process. This system ensures that notifications are sent immediately upon disbursement processing, using various modalities such as email, text messages, or direct updates to the student portal. We will enhance our enhance record-keeping through the utilization of Ellucian Colleague by logging all communications sent, ensuring that there is traceable evidence of compliance. This system integration addresses previous dependencies on third-party technologies and brings control of this crucial compliance aspect in-house.