Finding 547881 (2024-004)

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Requirement
E
Questioned Costs
-
Year
2024
Accepted
2025-03-31

AI Summary

  • Core Issue: The College failed to properly disburse Direct Unsubsidized Loans for 3 out of 40 students, indicating noncompliance with eligibility requirements.
  • Impacted Requirements: Compliance with 34 CFR 685.201 (a) (1-2) regarding loan origination and disbursement processes.
  • Recommended Follow-Up: The College should review and improve policies to ensure accurate disbursement of Title IV aid to all eligible students.

Finding Text

Criteria: 34 CFR 685.201 (a) (1-2) notes, “(1) To obtain a Direct Subsidized Loan or a Direct Unsubsidized Loan, a student must complete a Free application for Federal Student Aid and submit it in accordance with instructions in the application. (2) If the student is eligible for a Direct Subsidized Loan or a Direct Unsubsidized Loan, the school in which the student is enrolled must perform the following functions: (i) Create a loan origination record and transmit the record to the Secretary. (ii) Ensure that the loan is supported by a completed Master Promissory Note (MPN) and, if applicable, transmit the MPN to the Secretary. (iii) In accordance with 34 CFR 668.162, draw down funds or receive funds from the Secretary, and disburse the funds to the student.” Condition: The College did not properly disburse Direct Unsubsidized Loans for 3 out of 40 students (7.5%). We consider this condition to be an instance of noncompliance to the Eligibility compliance requirement and is not a repeated finding. Statistical sampling was not used in making sample selections. Questioned Costs: $0 Cause and Effect: Without proper review of eligibility of financial aid, students may receive an incorrect amount of Title IV aid. Recommendation: We recommend the College evaluate policies and procedures to ensure students receive the proper amount of Title IV aid. Views of Responsible Officials: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.

Corrective Action Plan

Identification and Review • Identify all students who received incorrect loan amounts (Completed) • Make appropriate adjustments to loan disbursements (Completed) • Notify affected students and provide guidance on next steps (Completed) Policy and Procedure Enhancements • Develop clear, written procedures for verifying loan amounts prior to disbursement • Implement a two-step verification process for loan packaging System Controls • Collaborate with IT to implement automated system checks to flag discrepancies • Enhance reporting tools for regular audits and monitoring Staff Training • Conduct comprehensive training sessions for financial aid staff on federal regulations regarding Direct Loans • Provide ongoing refresher courses and updates as federal policies change Monitoring Continuous Improvement • Establish a quarterly audit process to ensure compliance • Monitor loan discrepancies detected and correct as needed • Conduct regular audits to confirm compliance with federal loan regulations. • Collect feedback from staff on the effectiveness of training Responsible Person for Correction Action Plan: Alexis Brown, Director of Financial Aid Implementation Date for Corrective Action Plan: 03/03/25

Categories

Student Financial Aid Cash Management Eligibility Matching / Level of Effort / Earmarking

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $2.27M
84.063 Federal Pell Grant Program $1.15M
84.033 Federal Work-Study Program $973,426
84.038 Federal Perkins Loan Program $75,937
84.007 Federal Supplemental Educational Opportunity Grants $51,433