LOUISBURG COLLEGE INC.

2025-002 – U.S. Department of Education Student Financial Assistance Cluster – Special Testsand Provisions: Enrollment Reporting (Repeat Finding) Criteria: Institutions are required to report enrollment information under the Pell grant and the Directand FFEL loan programs via the NSLDS (National Student Loan Data System) (0MB No. 1845-0035), although FFEL loans are no longer made or a part of the SFA Cluster, a student may have a FFEL loan from previous years that would require enrollment reporting for that student (Pell, 34 CFR 690.83(b)(2); FFEL, 34 CFR 682.610; Direct Loan, 34 CFR 685.309; Perkins 34 CFR 674.19(f)). Condition and Context: The College failed to accurately and timely report student status changes to NSLDS for 9 students out of 10 students tested. Known Questioned Costs: None, reporting requirement not met. Cause: Due to turnover at the College, including in the office of the registrar and in the financial aid department, the College did not follow the standardized process for updating enrollment information promptly and lacked effective communication between the registrar and financial aid offices regarding student status changes. Effect: The College was out of compliance with the requirement enrollment reporting of student status changes. Inaccurate enrollment reporting can lead to improper loan servicing, incorrect disbursements, and potential issues for students regarding their loan repayment status. This finding raises compliance concerns and could result in financial liabilities for the institution. Recommendation: The College should implement a robust system for tracking and reporting enrollment changes, including regular training for staff involved in the enrollment process. Additionally, a routine audit of reported data should be conducted to ensure accuracy and compliance with federal regulations.

2024-002 – U.S. Department of Education Student Financial Assistance Cluster – Special Tests and Provisions: Verification Criteria: An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information for those applicants selected for verification by ED. The institution shall require each applicant whose application is selected by ED to verify the information required for the Verification Tracking Group to which the applicant is assigned. Condition and Context: The College was unable to locate supporting documentation for the verification of student information for 5 students out of 7 students tested. Known Questioned Costs: None, reporting requirement not met. Cause: Due to turnover at the College and in the financial aid department during the year under audit, supporting documentation to support the verification of student’s information was not properly maintained in the student’s file. Effect: The College was out of compliance with the requirement for student verification. This finding raises concerns about the college's compliance with federal verification requirements, potentially resulting in improper disbursement of federal funds. Recommendation: The College should enhance its verification process by establishing a checklist for required documentation, providing training for staff on verification requirements, and implementing a tracking system to monitor outstanding documentation for students selected for verification.

2024-003 – U.S. Department of Education Student Financial Assistance Cluster – Special Tests and Provisions: Return of Title IV Funds Criteria: Returns of Title IV funds are required to be deposited or transferred into the SFA account or electronic fund transfers initiated to ED as soon as possible, but no later than 45 days after the date the institution determines that the student withdrew. Returns by check are late if the check is issued more than 45 days after the institution determined the student withdrew or the date on the canceled check shows the check was endorsed more than 60 days after the date the institution determined that the student withdrew (34 CFR 668.173(b)). Condition and Context: The College failed to return title IV funds to the student within the 45-day time frame for 1 student out of 3 students tested. Known Questioned Costs: None, reporting requirement not met. Cause: Due to turnover at the College and in the financial aid department during the year under audit, a lapse in internal controls occurred related to the timing of the return of title IV funds to students. Effect: The College was out of compliance with the return of title IV funds for students who withdrew within the required 45-day time frame. The late return of Title IV funds may lead to potential non-compliance with federal regulations, exposing the institution to financial liability and affecting the eligibility for future federal funding. Recommendation: The College should establish a more effective withdrawal tracking system to ensure timely identification and processing of withdrawals. Additionally, regular training should be provided to financial aid staff on compliance with Title IV fund return requirements to prevent future occurrences.

2024-004 – U.S. Department of Education Student Financial Assistance Cluster – Special Tests and Provisions: Enrollment Reporting Criteria: Institutions are required to report enrollment information under the Pell grant and the Direct and FFEL loan programs via the NSLDS (National Student Loan Data System) (0MB No. 1845-0035), although FFEL loans are no longer made or a part of the SFA Cluster, a student may have a FFEL loan from previous years that would require enrollment reporting for that student (Pell, 34 CFR 690.83(b)(2); FFEL, 34 CFR 682.610; Direct Loan, 34 CFR 685.309; Perkins 34 CFR 674.19(f)). Condition and Context: The College failed to accurately and timely report student status changes to NSLDS for 10 students out of 11 students tested. Known Questioned Costs: None, reporting requirement not met. Cause: Due to turnover at the College, including in the office of the registrar and in the financial aid department, the College did not follow the standardized process for updating enrollment information promptly and lacked effective communication between the registrar and financial aid offices regarding student status changes. Effect: The College was out of compliance with the requirement enrollment reporting of student status changes. Inaccurate enrollment reporting can lead to improper loan servicing, incorrect disbursements, and potential issues for students regarding their loan repayment status. This finding raises compliance concerns and could result in financial liabilities for the institution. Recommendation: The College should implement a robust system for tracking and reporting enrollment changes, including regular training for staff involved in the enrollment process. Additionally, a routine audit of reported data should be conducted to ensure accuracy and compliance with federal regulations.

2023-001 – U.S. Department of Education Student Financial Assistance Cluster – Special Tests and Provisions: Return of Title IV Funds Criteria: When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or the period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs as outlined in this section and no additional disbursements may be made to the student for the payment period or period of enrollment. If the amount the student earned is greater than the amount disbursed, the difference between the amounts must be treated as a post-withdrawal disbursement (34 CFR 668.22(a)(1) through (a)(5)). Condition and Context: The College was unable to correctly calculate the amount of aid earned for three students out of six students tested. Known Questioned Costs: None, reporting requirement not met. Cause: The College did not correctly complete the R2T4 calculation worksheet. Effect: The College was out of compliance with the requirement to return Title IV funds. Recommendation: The College should continue to implement procedures to ensure the R2T4 calculation worksheet is accurately completed, as required. The College should also consider creating a training manual for any future new hires to learn the requirements related to federal aid scholarships.

Criteria: Institutions must report all loan disbursements and submit required records to the Common Origination and Disbursement system (COD) within 15 days of disbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution?s financial records. Since up to three Direct Loan program years may be open at any given time, schools may receive three SAS data files each month (34 CFR 685.102(b), 685.301, and 303). Condition and Context: The College was unable to produce the reconciliations for review. Known Questioned Costs: None, reporting requirement not met. Cause: The College had turnover in the financial aid department where the responsibility for the reconciliations were not completed by the department. Effect: The College was out of compliance with the requirement to routinely reconcile its accounts with COD.Recommendation: The College should continue to implement procedures to ensure routine reconciliations with COD are performed as required. The College should also consider creating a training manual for any future new hires to learn the requirements related to federal aid scholarships.

Criteria: At minimum, schools are required to verify enrollment every 60 days. Condition and Context: The College did not report status changes for various students, primarily withdrawn students, within a timely manner as required. Known Questioned Costs: None, reporting requirement not met. Cause: The College reports status changes through the Registrar?s Office every 30 to 45 days. However, the Financial Aid Office did not reconcile with the Registrar?s Office during this time period which caused the College to not meet the timely requirements. Effect: The College was out of compliance with the requirement to report status changes in a timely manner. Recommendation: The College should implement policies to report status changes in students on a more frequent basis to ensure compliance with the reporting requirements. The College should also consider creating a training manual for any future new hires to learn the requirements related to federal aid scholarships.

Criteria: For students who participate in the direct loan program, the College is required to show evidence of exit counseling, or evidence that the College attempted to send counseling to the students. Condition and Context: The College could not produce support showing completed exit counseling or proof of an attempt to send exit counseling for 19 students that graduated/withdrew out of 40 students tested. Known Questioned Costs: None, noncompliance related to additional requirements of the Direct Loan program. Cause: The College did not keep record of exit counseling being sent to students that graduated/withdrew. Effect: The College was out of compliance with the additional compliance requirement of the Direct Loan program. Recommendation: The College should implement policies to retain records relating to the sending of exit counseling to students that graduated/withdrew.

Criteria: The earliest an institution may disburse SFA funds (other than FWS) (either by paying the student directly or crediting the student?s account) is 10 days before the first day of classes of the payment period or module for which the disbursement is intended (34 CFR 668.164(i)). There are two exceptions to this rule. First, institutions may not disburse or deliver the first installment of Direct Loans to first-year undergraduates who are first time borrowers until 30 days after the student?s first day of classes (34 CFR 668.164(i)(2)), unless the institution has low default rates. Condition and Context: The College disbursed funds within 30 days of the first day of class for 12 first year students out of 40 students tested. Known Questioned Costs: $124,924 Cause: Disbursements of federal aid was processed at a similar timeframe for all students, regardless of first- or second-year status. Effect: The College was out of compliance with the requirement to withhold funds for true first year students for the first 30 days after the first day of class. Recommendation: The College should ensure policies exist to withhold funds for the first 30 days of classes for true first year students. The College should also consider creating a training manual for any future new hires to learn the requirements related to federal aid scholarships.

Criteria: To have students be eligible for Title IV funds, a student must make satisfactory academic progress, and the School must have a reasonable policy for monitoring that progress. Condition and Context: The College disbursed funds to one student out of 40 students tested who did not comply with the satisfactory eligibility progress policy set forth by the College. Known Questioned Costs: $6,573 Cause: The College did not monitor the student's GPA prior to federal aid disbursement. Effect: The College was out of compliance with the requirement that federal aid of Title IV funds be disbursed to students making satisfactory academic progress. Recommendation: The College should implement a tracking or review system to ensure all monies are disbursed to students who are meeting satisfactory academic policies set forth by the College.

2021-001 ? U.S. Department of Education Student Financial Assistance Cluster Criteria: Institutions must report all loan disbursements and submit required records to COD within 15 days of disbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution?s financial records. Since up to three Direct Loan program years may be open at any given time, schools may receive three SAS data files each month (34 CFR 685.102(b), 685.301, and 303). Condition and Context: The College was unable to produce the reconciliations for review. Known questioned costs: None, reporting requirement not met. Cause: The College had an IT issue where the monthly reconciliations were deleted and unable to be recovered. Effect: The College was out of compliance with the requirement to routinely reconcile its accounts with COD. Recommendation: The College should continue to implement procedures to ensure routine reconciliations with COD are performed as required. In addition, the College should consider maintaining a backup of files performed as appropriate for the College's operations.

2021-002 ? U.S. Department of Education Student Financial Assistance Cluster Criteria: If after the institution credits the scholarship to the account, the funds credited exceed the amount due by the student, the institution must pay the resulting credit balance to the student within fourteen (14) days of its receipt of funds or fourteen (14) days after the first day of class, whichever is later. Condition and Context: The College did not provide various students refunds of overpayments within 14 days for federal and State aid. Known questioned costs: None, noncompliance related to timing of refunds given. Cause: The College performs reconciliations within various computer systems prior to disbursing refunds to students. The reconciliations between multiple software can be inefficient and delay the disbursements to students. Effect: The College was out of compliance with the requirement to refund students within 14 days. Recommendation: The College should review their process for disbursing refunds to students to eliminate non value adding steps to ensure timely refunds to students.

2021-003 ? U.S. Department of Education Student Financial Assistance Cluster Criteria: At minimum, schools are required to verify enrollment every 60 days. Condition and Context: The College did not report status changes for various students, primarily withdrawn students, within a timely manner as required. Known questioned costs: None, reporting requirement not met. Cause: The College reports status changes for students in batches at the end of the semester, often not meeting the timely requirements. Effect: The College was out of compliance with the requirement to report status changes in a timely manner. Recommendation: The College should implement policies to report status changes in students on a more frequent basis to ensure compliance with the reporting requirements.

2020-001 ? U.S. Department of Education Student Financial Assistance Cluster Criteria: Institutions must report all loan disbursements and submit required records to COD within 15 days of disbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution?s financial records. Since up to three Direct Loan program years may be open at any given time, schools may receive three SAS data files each month (34 CFR 685.102(b), 685.301, and 303). Condition and Context: The College performed only one such reconciliation. Known questioned costs: None, because the reconciliation was completed without exception. Cause: The College has had significant turnover in the financial aid department which resulted in limited review of this process. Effect: While there were no issues with the reconciliation at the end of the year, the College was out of compliance with the requirement to routinely reconcile its accounts with COD. Recommendation: The College should implement procedures to ensure routine reconciliations with COD are performed as required.

2020-002 ? Federal Perkins Loan Program (CFDA 84.038) Criteria: Institutions must have borrowers complete a legally enforceable promissory note and maintain copies of such records pursuant to 34 CF 674.31 and 34 CFR 674.19(d) & (e), respectively. Condition and Context: The College did not maintain such records for 3 students. Known questioned costs: None. Cause: The College has had significant turnover in the financial aid department which resulted in limited review of this process. Effect: While the College?s Perkins Loan program has been mostly assigned to the Department of Education, there are still 83 borrowers assigned to the College for whom some of this required documentation may not have been retained. Recommendation: The College should implement procedures to remediate the missing documentation and proceed with the liquidation of the Perkins Loan program.

Item 2019-001: Federal Direct Student Loans (CFDA 84.268) Criteria: Federal regulation 34 CFR 685.309 state that the institution shall accurately report a change in a student?s enrollment status directly to the lender or guarantee agency within 30 days if a student has graduated, withdrawn, or ceased to be enrolled (or failed to enroll) at least half-time and the school does not expect to submit its next Roster File to NSLDS within 60 days. Condition: The College did not report students? status changes accurately and within the required timeframe. Known questioned costs: None, because the reporting date did not affect program costs. Context: Based on a sample of 50 students, 8 students? status changes were reported with the incorrect withdrawal date and 2 students? status changes were not reported within the required timeframe. Effect: Changes in student?s enrollment were not reported timely and accurately. Cause: The College did not have procedures in place to report all students? status changes in a timely and accurate manner. Repeat finding. See Finding 2018-003 in Summary Schedule of Prior Audit Findings. Recommendation: The College should implement procedures to ensure that student status changes are reported in a timely and accurate manner for students who receive federal loans. Views of responsible officials and planned corrective actions: Refer to the College?s Corrective Action Plan.

Item 2019-002: Federal Direct Student Loans (CFDA 84.268) Criteria: According to the Code of Federal Regulations, 34 CFR 668.164(e), whenever an institution disburses Title IV program funds by crediting a student?s account and the total amount of all Title IV program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but: (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition: The College did not remit credit balances to students within the required timeframe. Known questioned costs: None, because the timing of payments does not affect program costs. Context: Based on a sample of 40 students, the College failed to pay 1 student with a credit balance in a timely manner. Effect: Funds due to the student were not returned timely. Cause: The College did not have procedures in place to ensure that all credit balances were returned to the student in a timely manner. Repeat finding. See Finding 2018-004 in Summary Schedule of Prior Audit Findings. Recommendation: The College should implement procedures to ensure that credit balances are refunded to the student in a timely and accurate manner for students who receive federal funds. Views of responsible officials and planned corrective actions: Refer to the College?s Corrective Action Plan.

Item 2019-003: Federal Direct Student Loans (CFDA 84.268 Criteria: Federal regulation 34 CFR section 668.54(a) state that an institution must require an applicant whose Free Application for Federal Student Aid (FAFSA) information is selected for verification by the Secretary to verify the information specified by the Secretary. Condition: The College did not maintain the verification documentation within the students? file. Known questioned costs: Known question costs are $8,026. Context: Based on a sample of 40 students, 2 students did not have completed verification worksheets within their file. Effect: The requirement of verification could not be reviewed despite students receiving Title IV funds. Cause: The College did not have procedures in place to ensure proper record keeping of completed verification worksheets. Recommendation: The College should implement procedures to ensure that verification documents are secured and stored properly. Views of responsible officials and planned corrective actions: Refer to the College?s Corrective Action Plan.

Item 2019-004: Federal Direct Student Loans (CFDA 84.268) Criteria: Federal regulations 34 CFR 685.102(b) indicate that if a school is paying students with Direct Loan funds, the actual disbursement date should be reported to Common Origination and Disbursement (COD). Condition: The College disbursed and credited Direct Student Loans to students? accounts but reported a different disbursement date to COD. Known questioned costs: None, because the timing of payments does not affect program costs. Context: Based on a sample of 50 students who received loans under the Federal Direct Loan Program, 2 students? loan fund disbursement dates were shown to be different on the COD and students? accounts. Effect: Inaccurate disbursement dates were reported to the COD. Cause: The College did not have procedures in place to monitor disbursement dates reported to COD compared to actual dates disbursed and students? accounts. Repeat finding. See Finding 2018-006 in Summary Schedule of Prior Audit Findings. Recommendation: The College should implement procedures to ensure the date Direct Loan funds are reported to COD is consistent with the date disbursed to students either by credits to the students? accounts or direct payment to the parents or students. Views of responsible officials and planned corrective actions: Refer to the College?s Corrective Action Plan.

Item 2019-005: U.S. Department of Education Student Financial Aid Cluster (CFDA 84.268 and 84.038) Criteria: The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. The Federal Trade Commission considers Title IV-eligible institutions that participate in Title IV Educational Assistance Programs as ?financial institutions? and subject to the Gramm-Leach-Bliley Act (16 CFR313.3(k)(2)(vi). Under an institution?s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Condition: The College does not have a policy in place or person designated to coordinate the Gramm-Leach-Bliley Act. Known questioned costs: None. Context: The College does not have a policy in place or person designated to coordinate the Gramm-Leach-Bliley Act. Effect: The College is not in compliance with the requirement to follow the Gramm-Leach-Bliley Act. Cause: The College does not have a policy in place or person designated to coordinate the Gramm-Leach-Bliley Act. Recommendation: The College should implement a policy to ensure it follows the Gramm-Leach-Bliley Act and designate a person to oversee the policy. Views of responsible officials and planned corrective actions: Refer to the College?s Corrective Action Plan.

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