Finding 553920 (2024-001)

Finding No. 2024-01 Special Tests and Provisions - Return of Title IV Funds Federal Program Federal Pell Grant Program (PELL), ALN. 84.063 Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Significant Deficiency Compliance / Internal control Compliance Requirement Special test and provisions – Return of Title VI Funds Criteria 1. DCL GEN-04-03 Revised, November 2004, indicates “Treatment of a student who fails to receive a passing grade in any class”. a. An institution must have a procedure for determining whether a Title IV aid recipient who began attendance during a period completed the period or should be treated as a withdrawal. We do not require an institution to use a specific procedure for making this determination. i. If a student earns a passing grade in at least one course offered over an entire period, the institution may make the presumption that the student completed the course and, thus, completed the period. ii. No passing grades: If a student who began attendance and has not officially withdrawn fails to earn a passing grade in at least one course offered over an entire period, the institution must assume, for Title IV purposes, that the student has unofficially withdrawn, unless the institution can document that the student completed the period. iii. In this circumstance, if the institution determines that the student does have aid that could have been disbursed for the period and the student does not have any passing or “earned F” grades, the institution must perform the R2T4 calculation using the student’s documented withdrawal date and make any applicable PWDs. Finally, if the school does not have any completion percentage requirements for an incomplete grade, (or allows an incomplete grade to be assigned to a student without ensuring that the student completed at least 60% of the period), then the school must perform an R2T4 calculation. 34 CFR Section 668.173 (b) states that: an institution returns unearned title IV, HEA program funds timely if; (1) the institution deposits or transfers the funds into the bank account it maintains under §668.163 no later than 45 days after the date it determines that the student withdrew; (2) the institution initiates an electronic funds transfer (EFT) no later than 45 days after the date it determines that the student withdrew; (3) the institution initiates an electronic transaction, no later than 45 days after the date it determines that the student withdrew, that informs a FFEL lender to adjust the borrower's loan account for the amount returned; or (4) the institution issues a check no later than 45 days after the date it determines that the student withdrew Condition Found In testing compliance with the Return of Title IV Funds (R2T4) requirements, we selected a sample of six (6) students who received all failing and/or incomplete grades to determine whether each student completed the period. During our evaluation, we noted the following exceptions: 1. We identified one (1) instance in which a student began attendance but did not officially withdraw and failed to earn a passing grade in the only course taken during the entire payment period. Upon reviewing the academic records, we found no evidence of academic activity to indicate that the student completed the period. 2. Although the institution subsequently performed an R2T4 calculation, the Title IV funds were returned late. Cause The Institution’s Assessment Office requires faculty to submit a quarterly report titled “Low Academic Achievement,” in which professors must document the reasons why students received a grade of D or F in their course. While the institution acknowledges that these reports are not detailed and only indicate the timeframe during which the student participated in class, we noted that some student data was missing from the reports submitted by faculty. Additionally, as is customary at the institution, faculty members are not required to submit copies of their grade records. Effect As a result of these conditions, the Department of Education may impose penalties and deprive other needy students of federal funds. Context Of the sixty-three (63) participants of the Student Financial Aid Program with no passing grades, we examined six (6) participants of PELL and in one (1) case return of refund procedure were performed late. Identification of a Repeat Finding This is not a repeat finding from the immediate previous audit. Questioned Costs None Recommendation We recommend that the Institution strengthen and enforce its procedures for documenting and monitoring students who receive failing grades. Additionally, the Institution should ensure that the Return of Title IV Funds (R2T4) process is properly followed in accordance with federal regulations, and that compliance is consistently maintained. Views of Responsible Officials of the Auditee and Planned Corrective Actions Management of the University agrees with this finding. Please refer to the corrective action plan on pages 42.