Finding Text
Finding 2023-001 - Inappropriate Amounts Included in Loan Notification Letters (Significant Deficiency)
Grantor: U.S. Department of Education
Program: Student Financial Assistance Cluster
Assistance Listing #: 84.268
Award Title: Federal Direct Student Loan Program
Award Years: 7/2022 – 6/2023
Criteria
34 CFR Section 668.165 (a)(1-2):
(a) Notices
1. Before an institution disburses title IV, HEA program funds for any award year, the
institution must notify a student of the amount of funds that the student or his or her parent
can expect to receive under each title IV, HEA program, and how and when those funds will
be disbursed. If those funds include Direct Loan program funds, the notice must indicate
which funds are from subsidized loans, which are from unsubsidized loans, and which are
from PLUS loans.
2. Except in the case of a post-withdrawal disbursement made in accordance with §
668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal
Perkins Loan, or TEACH Grant program funds, the institution must notify the student or
parent of—
i. The anticipated date and amount of the disbursement;
ii. The student's or parent's right to cancel all or a portion of that loan, loan
disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan
proceeds or TEACH Grant proceeds returned to the Secretary; and
iii. The procedures and time by which the student or parent must notify the institution
that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement.
Condition
We selected a sample of 60 students who were disbursed federal student financial assistance to validate that
Ensign College (the College) was compliant with the U.S. Department of Education disbursement
requirements, including validating that the student and/or parent received the appropriate notifications for
Federal Direct Loans. For one sample, the College did not appropriately communicate the date and
amounts of the loan disbursement(s). Additionally, for two samples, the students did not receive a loan
disbursement letter prior to title IV funds being disbursed during the Fall 2023 semester.
Cause
For each of the conditions above, management identified errors in the student information system
configuration. In the instance where disbursement dates and amounts were not included in the
communication, the system incorrectly captured the student’s name rather than the date and amount of
disbursements. In the two instances where no loan disbursement letters were sent, the system was not
updated to reflect the new academic year commencing with the Fall 2023 semester, and as a result, no
notification letters were being sent prior to the title IV disbursement for that semester. This was due to lack
of training provided to financial aid staff.
Effect
Accurate communication of loan disbursement information helps students determine whether they want
to accept or cancel the loan. Furthermore, this information is reviewed by the student to understand their
responsibility to repay the loan and how much they will owe upon repayment.
Questioned Costs
None
Recommendation
We recommend that the College update the system configuration so that all loan disbursement
information is completely and accurately included in the loan notification letters and that those letters are
distributed to the student and/or parent in a timely manner. We also recommend the College enhance
their existing control process by performing validation checks to ensure the loan disbursement
notification is complete and accurate and provide adequate training to staff responsible for setting up new
academic years in their system.
Management’s Views and Corrective Action Plan:
Management’s response is reported in management’s views and corrective action plan included at the end
of this report.