Finding Text
Finding Number: 2022-001 Information on the Federal Program: Federal Agency: United States Department of Education (ED) Program Name: Student Financial Assistance Cluster AL: 84.268 - Federal Direct Student Loans Federal Award Identification Number: N/A Federal Award Year: Year Ended July 31, 2022 Specific Requirement: Required by 34 CFR 668.165, an institution must notify the student, or parent, in writing of (1) the date and amount of disbursement; (2) the student?s right, or parent?s right, to cancel all or a portion of that loan; 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. When funds are disbursed by electronic fund transfer and an institution does not implement an affirmative confirmation process, an institution must notify a student no earlier than 30 days before, but no later than 7 days after, crediting the student?s account of their right to cancel all or part of the loan within 30 days. Condition Found: During our audit, we noted the Organization did not send any disbursement notification letters informing the student, or their parent, of their right to cancel all or a portion of their loan for any Federal Direct Student Loans awarded during the academic year. Context: Based on our sample, which was based on a statistically-based methodology, all 6 students tested who were disbursed Federal Direct Student Loans did not receive the disbursement notification letters informing the student, or their parent, of their right to cancel all or a portion of the loan within the required timeframe. Based on our discussion with management, the disbursement notification letters were not sent for any Federal Direct Student Loan awarded during the 2021-2022 academic year. Questioned Costs: None. Cause and Effect: Financial aid department at the Organization was not aware that a separate notification outside of entrance counseling was required. As a result, students may not have been aware of their right to cancel their loan or the procedures and time by which the loan may be canceled. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend the Organization implement a control procedure to ensure disbursement notification letters are sent to every student who received direct loan disbursement, within 7 days, to be in compliance with the requirement described above.