Finding Text
2023-004 – Tier One and Tier Two Arrangements
Federal Agency: U.S. Department of Education
Federal Program Title: Federal Pell Grant Program; Federal Direct Loan Program
Federal Assistance Listing Number: 84.007, 84.033, 84.038, 84.063, and 84.268
Award Period: 7/1/2022 – 6/30/2023
Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters
Criteria or specific requirement: Per U.S. Department of Education (ED) regulations 34 CFR 668.164(e) and (f), an institution may enter into an arrangement with a servicer or a financial institution to make a direct payment of FSA credit balances to students through electronic funds transfer to a bank account designated by a student or parent, to issue a check payment to the student or to use an access device such as a debit, demand, or smart card provided by the servicer or its financial partner. The regulation establishes two different types of arrangements between schools and financial account providers: Tier One or Tier Two. Under both arrangements, a school must provide to the Department of Education an up-to-date URL for the contract for publication in a centralized database accessible to the public. Unless the school has a Tier Two arrangement under the threshold, the URL must also include the contract data information.
Condition: Certain arrangement criteria’s were not reported to the Department o Education.
Questioned costs: None
Context: During testing, it was determined that the University has a Tier One contract with a third-party. Per review of the Federal Student Aid site, under "Cash Management Contracts”, it was determined that the University had not provided a URL to the Department of Education regarding its Tier One arrangement.
Cause: This requirement was new for the University during the year; however, due to capacity and demands on federal requirements, this is still a work in process.
Effect: Noncompliance can lead to the University potentially losing Title IV aid eligibility.
Repeat finding: No
Recommendation: We recommend the University review its policies and procedures on reporting requirements to the Department if Education in respects to these requirements.
Views of responsible officials: Management agrees with the finding.