Finding Text
Finding No. 2022-002 Federal Perkins Loans Recordkeeping and Record Retention Federal Agency: Department of Education Program: Federal Perkins Loan Program: ALN:84.038 Criteria: Per 34 CFR 674.19?, an institution shall keep the original promissory notes and repayment schedules until the loans are satisfied. If required to release original documents in order to enforce the loan, the institution must retain certified true copies of those documents. Condition: Based on inspection of 25 student files, it was noted that there were two files that did not contain original loan documents. Questioned Costs: None. Prevalence: Out of 25 student files tested, two did not contain original loan documents. The sample was not intended to be, and was not, a statistically valid sample. Effect: The institution may not be able to assign the loan to the government or enforce the loan without original promissory notes. Cause: The College has been participating in for many years, and as such, original records on loans disbursed for students were lost/misplaced since origination due to physical location changes as well as staff changes. In addition, older loans were disbursed with multiple promissory notes, whereas regulations changes from 2003 onwards enforced the use of Master Promissory Notes, which lessened the volume of loan documentation to be retained. Recommendation: We recommend the College continue to search for the missing promissory notes and if unsuccessful remove the loans from its Perkins portfolio as the Government portion will not be able to be turned over to the DOE. View of Responsible Officials and Planned Corrective Actions: Management agrees with the finding, and corrective measures have been made.