Finding Text
2023-005 Significant Deficiency: Disbursement Notifications (U.S. Department of Education, William D.
Ford Direct Loan Program, ALN #84.268)
Criteria: In accordance with 34 CFR 668.165(a)(2), when a University credits a student’s account, the
University must notify the student or parent of (i) the anticipated date and amount of the
disbursement, (ii) the student’s or parent’s rights to cancel all or a portion of that loan or
disbursement, and (iii) the procedures and time by which the student or parent must notify the
University that he or she wishes to cancel the loan or disbursement. This communication must occur
no earlier than 30 days before, and no later than seven days after, crediting the student’s ledger
account at the institution if the institution does not obtain affirmative confirmation from the student.
Statement of Condition: During the 2023 audit, it was noted that certain students who had received
Direct Loan funds did not receive disbursement notifications.
Questioned Costs: Such information is not applicable for this finding since it is nonmonetary in nature.
Perspective Information: The 2023 audit included a detailed testing of 40 student files, of which this
significant deficiency applies to 5, indicating an error rate of 12.5%.
Cause and Effect: Due to the University’s lack of retention of the appropriate documentation, we
were unable to determine or test the disbursement notifications for Direct Loans were made to
affected students resulting in the inability to appropriately review the documentation to satisfy
testing requirements.
Recommendation: The University should verify and retain documentation that appropriate
communication is made to students receiving Direct Loan funds.
View of Responsible Officials: Once IT was made aware of the issues, we implemented changes to the
process. The action code was discontinued, and our database administrator developed a custom
database table used only for tracking Financial Aid communications. This custom table tracks the
student’s organizational ID number, email address, communication code (MAND for mandatory loan
emails), date/time the email was processed, and the status returned by the process used to send
emails. Please note that this status only checks whether the process succeeded, it does not check
whether the email was successfully sent. The Financial Aid Department is still copied in all emails sent
at their main email address (currently FinancialAidTN@Johnsonu.edu). The Financial Aid Department
has the responsibility to alert the IT Department if they are not receiving emails as expected. Once
the IT Department has been alerted of an issue, the IT Department can start working to resolve the
issue.
For long-term reliability of communications, Johnson University has purchased and is implementing a
new Financial Aid software platform. This will give us an opportunity to work towards reliable
communications, not just reliable logging of process failures or successes.