Finding Text
Special Tests and Provisions – Disbursements to or on Behalf of Students
Student Financial Assistance Cluster – AL 84.007, 84.063 and 84.268
US Department of Education
Significant Deficiency and Nonmaterial Noncompliance
Criteria or specific requirements
34 CFR 668.164(h)(2):
A Title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but no
later than (i) Fourteen (14) days after the balance occurred if the credit balance occurred after the first
day of class of a payment period; or (ii) Fourteen (14) days after the first day of class of a payment period
if the credit balance occurred on or before the first day of class of that payment period.
Condition
During our testing over the return of credit balances, the following deficiencies were noted:
8 instances where credit balances were not refunded in the required time frame.
11 instances where refunds were due to students but none were posted in the ledger.
7 instances where the balances refunded to students could not be recalculated.
Cause
The College did not comply with Federal disbursement requirements for students under the Pell Grant
and Direct Loan programs.
Effect
The College is not in compliance with the Federal requirement described in the OMB Compliance
Supplement.
Questioned costs
None identified.
Context
The College contracts with a third-party servicer to perform one or more of the functions associated with
disbursing Title IV funds on behalf of the school. A nonstatistical sample of 40 students out of 514
students were selected for disbursement testing. Identification as a repeat finding
Previously reported as finding 2023-006.
Recommendation
It is recommended the College should establish effective controls and processes to ensure that accurate
credit balances are refunded to students in a timely manner.
View of responsible officials and corrective action plan
Management agrees with the finding. Please see separate Corrective Action Plan for procedures to be
implemented.