Finding Text
Federal Program Information:
Federal Supplemental Educational Opportunity Grants (ALN: 84.007), Federal Work-Study Program (ALN: 84.033), Federal Pell Grant Program (ALN: 84.063), and Federal Direct Student Loans (ALN: 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation):
N. Special Tests and Provisions – Using a Servicer or Financial Institution to Deliver Title IV Credit Balances to a Card or Other Access Device - An institution may enter into an arrangement with a servicer or a financial institution to make a direct payment of FSA credit balances to students through electronic funds transfer to a bank account designated by a student or parent, to issue a check payment to the student or to use an access device such as a debit, demand, or smart card provided by the servicer or its financial partner.
Regulations at 34 CFR 668.164(e) and (f) establish two different types of arrangements between schools and financial account providers: Tier One arrangements and Tier Two arrangements. The type of arrangement determines the provisions that are applicable to the school.
A school must disclose conspicuously on its Web site the contract(s) establishing the Tier One or Tier Two arrangement, except for any portions that, if disclosed, would compromise personal privacy, proprietary information technology, or the security of information technology or of physical facilities (34 CFR 668.164(e)(2)(vi) and 668.164(f)(4)(iii)).
Schools with Tier One arrangements or Tier Two arrangements above the credit balance threshold must also disclose on their Web site: (a) the total consideration for the year, monetary and non-monetary, paid or received by the parties under the terms of the contract; (b) for any year in which the school's enrolled students open 30 or more financial accounts under the arrangement, (i) the number of students who had financial accounts under the contract at any time during the most recently completed award year, and (ii) the mean and median of the actual costs incurred by those account holders. This disclosure must be updated within 60 days after the end of each award year.
A school must also provide to ED an up-to-date URL for the contract for publication in a centralized database accessible to the public. Unless the school has a Tier Two arrangement under the credit balance threshold, the URL must also include the contract data described in the paragraph above (34 CFR 668.164(e)(2)(viii); 668.164(f)(4)(iii)(B); 668.164(f)(4)(v)).
Condition:
Certain required disclosures were not appropriately made by the University for existing Tier One arrangements.
Cause:
Insufficient administrative oversight and internal controls with respect to disclosure requirements for Tier One arrangements with servicers that make direct payments of FSA credit balances to students.
Effect or Potential Effect:
The University was not in compliance with the disclosure requirements for Tier One arrangements with servicers that make direct payments of FSA credit balances to students.
Questioned Costs:
None.
Context:
The University did not disclose in a conspicuous location on its Web site the contract establishing the Tier One arrangement. Additionally, certain required disclosures regarding activity under the contract for the award year were not made or updated within 60 days after the end of the award year. Finally, the University did not provide an updated URL for its Tier One contract to the ED as required.
Identification as a Repeat Finding:
No similar findings noted in the prior year.
Recommendation:
We recommend that the University enhance its internal controls and implement formal policies and procedures over the applicable compliance requirements to ensure that all Tier One or Tier Two arrangements entered into are properly disclosed as required.
Views of Responsible Officials:
The University acknowledges shortcomings in our institutional processes for managing and communicating the details of Tier One and Tier Two financial arrangements. This has been due to a combination of factors, including outdated website management practices, a lack of clear guidelines on compliance responsibilities for web content, and insufficient inter-departmental communication regarding changes in federal regulations and their implications for our disclosure practices.
The University is establishing a continuous feedback loop between Financial Aid, the Business Office, and University Communications and Marketing departments to ensure that our contractual disclosures are not only compliant but also clear and accessible to our stakeholders. Enhanced communication and collaboration across these departments are pivotal for maintaining ongoing compliance and ensuring that all disclosures are managed efficiently and transparently. This proactive approach is aimed at fostering a culture of compliance and transparency throughout the University.
The University will improve the accessibility and visibility of contractual disclosures on its website to ensure compliance with federal requirements. The updated URLs will be provided to the Department of Education for publication of the contract in a centralized, accessible database.
In addition, in partnership with Financial Aid Services (FAS), the University will conduct comprehensive interdepartmental training sessions by August 2025 for all relevant staff, emphasizing the critical nature of compliance with federal disclosure requirements.