Finding Text
Finding 2023-004 - Significant Deficiency, Compliance
Federal Award No. 84.268
U.S. Department Of Education
Student Financial Aid Cluster – Eligibility
Criteria: According to the 2022-2023 Student Financial Aid Handbook, the College is required to award subsidized loans up to the maximum amount available for each student for a given year based on the student’s need analysis and aggregate borrowing history before the College awards unsubsidized loans.
Condition: In our nonstatistical sample of 40 students, we noted 2 students who were awarded unsubsidized loans instead of subsidized loans when the student had remaining subsidized loan eligibility in the 2022-23 academic year.
Context: Both students that were underawarded subsidized loans and overawarded unsubsidized loans were initially capped on the total amount of federal direct loans that could be awarded to the students based on the students’ need analysis and aggregate loan limits. When packaging the loans, the student financial aid staff erroneously awarded portions of the loan awards as direct unsubsidized loans instead of subsidized loan awards. For both students the total amount of loan awards was proper and the student was not overawarded or underawarded overall. One student was overawarded unsubsidized loans and underawarded subsidized loans in the amount of $5,000 and the other student was overawarded unsubsidized loans and underawarded subsidized loans in the amount of $1,500.
Effect: Students are charged interest on unsubsidized loans while enrolled at least half-time at higher education institutions, whereas students are not charged interest on subsidized loans. Therefore, the students were charged approximately $188 and $75, respectively in interest that the students should not have incurred if the loans were awarded properly.
Questioned Costs: $263 additional interest costs incurred by students
Cause: Bethany College did not have proper processes and related controls in place to ensure that awards were packaged appropriately for circumstances where a student’s loan eligibility was limited by the need analysis calculation or by aggregate loan limits.
Indication Of Repeat Finding: This is not a repeat finding.
Recommendation: The Financial Aid department should put in place controls that would ensure that all loans are properly awarded including additional review of loan awards that are made as a result of adjustments needed to a student’s loan award to accommodate an annual or aggregate limit.
Views Of Responsible Officials (Unaudited): The College concurs with the finding and has reviewed and where appropriate made updates to the processes used to package loans when there is an annual or aggregate loan limit reached.
Completion Date: August 2023
Contact Person: Haley Wesley, Vice President of Enrollment Management & Marketing