Finding Text
Assistance Listing Number. Federal Agency, and Program Name - 84.268, U.S. Department of Education, Federal Direct Student Loans
Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes - 2022-003
Criteria - The Seminary must notify the student or parent in writing of the following related to the student's direct loan: (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; 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 in accordance with 34 CFR 668.165.
Condition - Of the 19 students who received disbursements selected for testing, the Seminary did not notify any of the students or parents, as applicable, that received direct federal loans within the required 30 days.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - Out of a sample of 19, our testing identified that none of the 19 students who received federal direct loans were notified at all.
Cause and Effect - The Seminary did not have formal procedures and controls in place to notify borrowers of their amounts, rights, and procedures related to the disbursement of federal direct loans for the full year.
Recommendation - We recommend the Seminary maintain a procedure and control in place to ensure that, upon each disbursement of direct loans, the Seminary notifies the borrower of the required elements in accordance with the loan program.
Views of Responsible Officials and Planned Corrective Actions - Directly after a students’ direct loan is disbursed, the financial aid director manually sends the loan disbursement notification email to the student (through the Jenzabar Financial Aid system), which specifies the amount that they borrowed for the term and the right to cancel the loan within 14 days by emailing the financial aid office. This email is recorded in the Jenzabar Financial Aid system. The financial aid director also created a spreadsheet to track direct loan disbursements and notifications each term.