Finding Text
Federal Program Information: Federal Direct Student Loans (ALN# 84.268) Criteria or Specific Requirement: N. Special Tests and Provisions ? Disbursements to or on Behalf of Students - An institution is required to refund credit balances on student accounts within 14 days of the creation of the credit balance. If an institution attempts to refund the credit balance by check and the check is not cashed, the institution must return the funds to the U.S. Department of Education no later than 240 days after the date the school issued the check. Condition: The College did not pay a certain student his Title IV credit balance within the required timeframe. Cause: An administrative oversight resulted in the College erroneously crediting a student?s account with Federal Direct Loans program funds prior to the student having received entrance counseling. This matter was resolved subsequent to the 14-day refund requirement. Effect or Potential Effect: The College was not in compliance with the Title IV credit balance payment requirements. Questioned Costs: None. Context: For 1 of 25 credit balances tested, the College did not refund the student within the required 14-day timeframe. Identification as a Repeat Finding: There was no similar finding identified during the prior year. Recommendation: We recommend the College enhance its procedures to ensure that Title IV credit balances are paid timely. Views of Responsible Officials: Management of the College agrees with the finding. In this instance, there was a manual intervention which caused a loan to credit to the student account. A decision was made to leave the credit but not refund as a motivation for the student to complete the required Entrance Counseling. The student subsequently completed the Entrance Counseling when the loan credit was reversed. As soon as the Entrance Counseling was completed the loan was recredited and the refund was processed within the appropriate timeframe. The individual who made the decision to not refund is no longer with the University. Staff have been trained that, unless the borrower has completed all requirements, loans cannot be credited to an account and the ?do not refund? option is not an appropriate tool in such an instance.