Finding Text
Federal Program Information: Federal Direct Student Loan Program (ALN: 84.268)
Criteria or Specific Requirement
(Including Statutory, Regulatory or
Other Citation):
N. Special Test and Provisions – Disbursements To or On
Behalf of Students – Loan Disbursement Notification - Federal
regulations (34 CFR section 668.165 (a)(6)(i)) require that the
institution notify the student, or parent, in writing of (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 or the TEACH Grant payments returned
to the ED; 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, TEACH Grant, or TEACH Grant
disbursement. Institutions that implement an affirmative
confirmation process (as described in 34 CFR section 668.165
(a)(6)(i)) must make this notification to the student or parent
no earlier than 30 days before, and no later than 30 days
after, crediting the student’s account at the institution with
Direct Loan or TEACH Grants. The Federal Student Aid
Handbook further clarifies that in general, there are two
types of notifications a school must provide: (1) a general
notification to parent Direct PLUS borrowers and all students
receiving Federal Student Aid (“FSA”) funds, and (2) a notice
when FSA loan funds or TEACH Grant funds are credited to a
student’s account.
Condition: Certain borrowers did not receive a loan disbursement
notification, or the University was unable to provide a copy
of the loan disbursement notification sent to the student.
Cause: Administrative oversight with respect to loan disbursement
notifications.
Effect: Students and/or parents were not properly notified of loan
disbursements and/or their right to cancel/decline loan
awards.
Questioned Costs: None.
Context: For 2 of 40 students selected for testing, the University was
unable to provide documentation supporting appropriate loan
disbursement notification.
Identification of Repeat Finding: This is a repeat finding from prior year. This was reported as
Finding 2022-004 in the prior year schedule of findings and
questioned costs.
Recommendation: We recommend the University enhance its procedures over
loan disbursement notifications to ensure that such
notifications are sent to student and/or parent borrowers
within the required timeframe.
Views of Responsible Officials and
Planned Corrective Actions:
The Financial Aid office made several staffing changes in
2022-2023. The loan coordinator left the institution. Newly
hired staff were not properly trained, resulting in the failure
to carry out loan notification as required. The VP of
Enrollment created a process, implemented in the Spring of
2023, that automated the student loan disbursement
notifications with-in the required 30 days of student accounts
transmitting their loans.