Clark State CollegeLocal Government

Federal Program Information: Federal Direct Student Loans, ALN 84.268 Criteria: 34 CFR 685.203(d), (e) ? The aggregate unpaid principal amount of all Direct Subsidized Loans made to a student but excluding the amount of capitalized interest may not exceed $23,000 in the case of any student who has not successfully completed a program of study at the undergraduate level. The total amount of Direct Unsubsidized Loans, excluding the amount of capitalized interest, may not exceed $31,000 minus any Direct Subsidized Loan for a dependent undergraduate student. Condition: One student in a sample of twenty-five was awarded a Direct Unsubsidized Loans in excess of the aggregate limit. Questioned Costs: Questioned costs for the Direct Unsubsidized Loan over-award was $1,500. Context: In a sample of twenty-five students receiving Title IV funds, one student was over-awarded and over-disbursed a Direct Unsubsidized Loan during the year that resulted in the student exceeding the aggregate Direct Unsubsidized Loan borrowing limit for dependent, undergraduate students. Cause/Effect: The College uses the student financial aid packaging software to incorporate borrowing history to calculate Direct Subsidized and Unsubsidized Loans when the student is awarded federal aid. The student is awarded through the packaging software one time. Additional requests for loan funds or adjustments to awards are processed manually. Direct Subsidized and Unsubsidized Loans are not added to the student?s borrowing history until a loan has been originated with the US Department of Education. The selected student was initially awarded Direct Unsubsidized Loans by the packaging software in accordance with the aggregate loan limits. However, there was a manual adjustment to the student?s award package by a College staff member that subsequently increased the Direct Unsubsidized Loans in excess of the aggregate loan limits. Recommendation: We recommend review of current practices and implement policies establishing monitoring procedures governing the awarding process (automatic and manual) to ensure that Direct Loans are awarded in accordance with federal guidelines. Management Response: The College agrees with the finding and is implementing appropriate procedures. Please refer to the College?s corrective action plan presented on page 75.

Federal Program Information: Federal Pell Grant Program, ALN 84.063 Criteria: 34 CFR 690.62 ? For the Federal Pell Grant Program, institutions use the payment and disbursement schedules provided each year by the U.S. Department of Education for determining award amounts. Those schedules provide the annual amount a student would receive for a full academic year for a given enrollment status, EFC, and COA. There are separate schedules for full-time, three-quarter-time, half-time, and less-than-half-time students. Condition: For one student in a sample of twenty-five, the College incorrectly calculated and awarded a Federal Pell Grant. Questioned Costs: Questioned costs for the Federal Pell Grant under-award was $794. Context: In a sample of twenty-five students receiving Title IV funds, one student was under-awarded and under-disbursed a Federal Pell Grant. Cause/Effect: Federal Pell Grant are awarded through an automated process. The College?s student financial aid packaging software automatically adjusts Federal Pell Grants to coincide with the schedules provided by the Department of Education and the student enrollment status and COA. Based on an incorrect enrollment status manually adjusted in the software, the system incorrectly calculated the Federal Pell Grants for the selected student, which resulted in an under-award of $794. Recommendation: We recommend implementing policies and establishing monitoring procedures governing the awarding process to ensure manual adjustments are properly documented and reviewed and Federal Pell Grants calculated by the financial aid software are awarded in accordance with federal guidelines. Management Response: The College agrees with the finding and is implementing appropriate procedures. Please refer to the College?s corrective action plan presented on page 75.

Federal Program Information: Federal Direct Student Loans, CFDA No. 84.268 Criteria: A student who is not in default on Federal Direct Subsidized and Unsubsidized Loans (Direct Loans), but has inadvertently obtained Direct Loans funds in an amount that exceeds the annual or aggregate loan limits under the program, is ineligible to receive Title IV, Higher Education Act program assistance until the (1) repays in full the excess loan amount; or (2) makes arrangements, satisfactory to the holder of the loan, to repay that excess loan amount. Condition: One student in a sample of twenty-five had inadvertently obtained Direct Subsidized Loans in an amount that exceeded the aggregate loan limits under the program, previous to the current academic year, and was awarded a Federal Unsubsidized Direct Loan. Questioned Costs: Questioned costs for the undergraduate Subsidized over-award was $2,750. Context: In a sample of twenty-five students receiving Title IV funds, one student was ineligible due to inadvertently obtaining Direct Subsidized Loans during previous academic terms in an amount that exceeded the aggregate loan limits under the program that had not been resolved to allow the student to regain eligibility. This student was awarded Direct Unsubsidized Loans during the current academic year while ineligible. Cause/Effect: The College uses the student financial aid packaging software to flag various ineligibility codes reported on the Institutional Student Information Record (ISIR). For this student, the system flagged a National Students Loan Data System (NSLDS) code, which prevented the ISIR from passing through the automated packaging process and required a manual review and award. As the student had exceeded the aggregate loan limit for Direct Subsidized Loans, the College did not award any additional Direct Subsidized Loans to the student but awarded Direct Unsubsidized Loans, which had not exceeded the aggregate loan limit. However, the student was ineligible to receive any Title IV, Higher Education Act program assistance. Recommendation: We recommend review of current practices and implement policies establishing monitoring procedures governing the awarding process (automatic and manual) to ensure that Direct Loans are awarded in accordance with federal guidelines. Management Response: The College agrees with the finding and is implementing recommendations. Please refer to the College?s corrective action plan presented on page 71.

Federal Program Information: Federal Direct Student Loans, CFDA No. 84.268 Criteria: The aggregate unpaid principal amount of all Direct Subsidized Loans and Subsidized Federal Stafford Loans made to a student but excluding the amount of capitalized interest may not exceed the following: (1) $23,000 in the case of any student who has not successfully completed a program of study at the undergraduate level. (2) $65,500 in the case of a graduate or professional student, including loans for undergraduate study. Condition: One student in a sample of sixty was awarded a Federal Subsidized Direct Loan in excess of the aggregate limit. Questioned Costs: Questioned costs for the undergraduate Subsidized over-award was $3,000. Context: In a sample of sixty students receiving Title IV funds, one student was over-awarded and over-disbursed a subsidized Federal Subsidized Direct Loan during the year that resulted in the student exceeding the aggregate Subsidized borrowing limit for undergraduate students. Cause/Effect: The College uses the student financial aid packaging software to incorporate borrowing history to calculate Subsidized and Unsubsidized Direct loan funds when the student is awarded federal aid. The student is awarded through the packaging software one time. Additional requests for loan funds or adjustments to awards are processed manually. Subsidized and Unsubsidized loans are not added to the student?s borrowing history until a loan has been originated with the US Department of Education. The Financial Aid Office does receive notification from the US Department of Education when student loan disbursements cause the student to exceed the aggregate limits for Subsidized loan and/or the combination of Subsidized and Unsubsidized loans; Financial Aid personnel review the notices and make manual corrections to student loans to, either, reduce total loans or reallocate Subsidized to Unsubsidized loan. The reviewed student did have a staff member notation on her record that notification was received; there was no manual adjustment to the award following the notification. Recommendation: We recommend review of current practices and implement policies establishing monitoring procedures governing the awarding process (automatic and manual) to ensure that Direct Loans are awarded in accordance with federal guidelines. Management Response: The College agrees with the finding and is implementing recommendations. For the affected student, the Financial Aid Office reviewed the student?s loan history, reduced Subsidized loan to aggregate limit, reallocated $2,000 Subsidized over award to Unsubsidized aggregate limit.

Federal Program Information: Federal Pell Grant Program, CFDA No. 84.063; Federal Direct Student Loans, CFDA No. 84.268 Criteria: 34 CFR 688.22 requires the college to determine the amount of Title IV funds that the student earned as of the student?s withdrawal date. 34 CFR 668.22(j) requires the college to return program funds within 45 days of the determination date of withdrawal, and to determine the date of withdrawal within 30 days after the period of enrollment. Condition: Five students in a sample of forty tested did not meet the time requirements related to the Return of Title IV funds (R2T4). Questioned Costs: None Context: For three of forty students tested, the College did not return funds within 45 days from the date of withdrawal as required. For two of forty students tested, the College did not determine the student withdrew within the required time period. Cause/Effect: R2T4 calculations prepared by the Financial Aid Office are submitted to the Business Office for repayment to the US Department of Education. The frequency of Return of Title IV Funds processing can vary with time in semester and is impacted by enrollment action dates (i.e. first day of class, last day to drop with 100% refund). The notification from the Financial Aid Office to the Business Office was not completed within the required timeframe. Additionally, the College used the incorrect date to calculate Return of Title IV funds for unofficial withdrawals as reported at the end of the semester. Recommendation: We recommend management strengthen controls to ensure that all students requiring a return of funds calculation are identified and return of funds procedures are performed timely and accurately. Management Response: The College agrees with the finding and has implemented appropriate procedures.

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