Finding Text
Federal Program Information: Federal Direct Student Loans (ALN #84.268) Criteria or Specific Requirement: Special Tests and Provisions ? Disbursements To or On Behalf of Students - Loan Disbursement Notification - Federal regulations (34 CFR section 668.165 (a)(6)(i)) require that the institution notify the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan or the TEACH Grant payments returned to the U.S. Department of Education; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, TEACH Grant, or TEACH Grant disbursement. Institutions that implement an affirmative confirmation process (as described in 34 CFR section 668.165 (a)(6)(i)) must make this notification to the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student?s account at the institution with Direct Loan or TEACH Grants. The Federal Student Aid Handbook further clarifies that in general, there are two types of notifications a school must provide: (1) a general notification to parent Direct PLUS borrowers and all students receiving Federal Student Aid (?FSA?) funds, and (2) a notice when FSA loan funds or TEACH Grant funds are credited to a student?s account. Condition: Instances were identified where the required loan disbursement notifications were not sent to the student or parent. Cause: Lack of administrative oversight and insufficient internal control over compliance with respect to loan disbursement notification requirements, including untimely review of notification logs. Effect or Potential Effect: Students and/or parents were not notified of award disbursements and/or their right to cancel/decline loan awards in a timely manner. Questioned Costs: None. Context: For 25 of 25 students selected for testing, the University did not send the required loan disbursement notifications to borrowers. Identification as a Repeat Finding: There was no similar finding in the prior year. Recommendation: We recommend the University enhance its policies, procedures and internal control over compliance with award notifications to ensure that such notifications are sent to student and/or parent borrowers within the required timeframe. We also recommend timely review of notification logs and retention of proper documentation. Views of Responsible Officials: The Policy and Procedures manual has been updated to reflect the following updated process: The Financial Aid Office has implemented measures to ensure students/parents that have Title IV loans disbursed are sent loan disbursement notifications via Colleague once a loan disbursement has been made. The process is done via Colleague each day and captures all Title IV loan disbursements made for the previous day. The notifications are processed via the ST-PCB process in Colleague, which sends a system generated loan disbursement notification to the student/parent. Processes are being worked on with the Information Technology department to generate a copy of the notification and to put in place a paper notification if no parent email is provided.