University of the Cumberlands, Inc.Higher Education

2025‐001 Significant Deficiency: Awards in Excess of Aggregate Limits (U.S. Department of Education, William D. Ford Direct Loan Program, ALN #84.268) Criteria: In accordance with 34 CFR 685.203(d), 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. In accordance with 34 CFR 685.203(e), the total amount of Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, and Federal SLS Loans, excluding the amount of capitalized interest, may not exceed the following: (1) For a dependent undergraduate student, $31,000 minus any Direct Subsidized Loan and Subsidized Federal Stafford Loan amounts, unless the student qualifies under paragraph (c) of this section for additional eligibility or qualified for that additional eligibility under the Federal SLS Program; (2) For an independent undergraduate or a dependent undergraduate who qualifies for additional eligibility under paragraph (c) of this section or qualified for this additional eligibility under the Federal SLS Program, $57,500 minus any Direct Subsidized Loan and Subsidized Federal Stafford Loan amounts; (3) For a graduate or professional student, $138,500, including any loans for undergraduate study, minus any Direct Subsidized Loan, Subsidized Federal Stafford Loan, and Federal SLS Program loan amounts. Statement of Condition: During the audit, it was noted that a student included in the testing sample was awarded direct loans beyond aggregate limits. The student’s aggregate loans exceeded the limit prior to awarding, so the entirety of the current year award was in excess. Questioned Costs: The detected monetary error in the award is $19,038. Rather than extrapolating the error, the University was able to identify all applicable students for which this error also exists. Across 16 graduate students, including the individual selected in the audit sample, $137,427 in direct loans were awarded to students whose lifetime aggregate limits were at or in excess of the limit prior to awarding for the 2024‐25 award year. Across 21 undergraduate students, $109,542 in direct loans were awarded to students whose undergraduate aggregate limits were at or in excess of the limit prior to awarding for the 2024‐25 award year. Across 4 undergraduate students, $5,245 in direct subsidized loans were awarded to students whose undergraduate subsidized limits were at or in excess of the limit prior to awarding for the 2024‐25 award year. The total monetary error identified is $252,214 over‐awarded to 41 students. Perspective Information: The audit included a detailed testing of files for 30 students, to which direct loan funds were disbursed. This significant deficiency applies to 1, indicating an error rate of 3.00%. Cause and Effect: This issue is caused by the absence of timely National Student Loan Data System (NSLDS) post‐screening updates for the 2024‐25 award year amidst reporting changes for colleges and universities. The release of this data was delayed to Spring 2025 and the Department recognized the ongoing administrative burden that this delay represents; to help support schools, NSLDS agreed to start providing an Excel file (.xlsx) that identifies applicants for the 2024–25 award year whose eligibility status has changed since their initial 2024–25 FAFSA submission. This excel file was not sufficiently referenced for the students who were over‐awarded direct loans related to codes 09 (student has exceeded subsidized aggregate loan limit) and 10 (student has exceeded combined aggregate loan limit), resulting in the noted over‐awards. Per discussion with University personnel, the post‐screening data updates are being received and are functional for new awards made in Spring 2025 and after. Recommendation: The University should ensure that all available data is reviewed, and that additional information is requested as needed to verify students are awarded within the limitations in place to ensure awards are made only in appropriate circumstances. Aggregate loan totals, along with other facets of data that would affect award eligibility, should be confirmed prior to awarding and disbursement. View of Responsible Officials: Corrective action is being implemented to include contacting each student to inform them of the required reaffirmation process and to ensure that, in the event postscreening data is provided outside the automated process, those files are reviewed and applied promptly.

2025‐002 Significant Deficiency: Working During Scheduled Class Time (U.S. Department of Education ‐ Federal Work Study Program, ALN #84.033) Criteria: In accordance with the 2024‐2025 Federal Student Aid Handbook, in general, students are not permitted to work in Federal Work Study positions during scheduled class times. Exceptions are permitted if an individual class is cancelled, if the instructor has excused the student from attending for a particular day, and if the student is receiving credit for employment in an internship, externship, or community work‐study experience. Any such exemptions must be documented. Statement of Condition: During the audit, it was noted that multiple students appear to have been paid for Federal Work Study hours logged and submitted for time the student was scheduled to be in class without verification of reasonable exemption. Questioned Costs: The known monetary error is an over‐payment of $23. Extrapolation of the error across all students and pay periods that may have been affected estimates total possible monetary error of $7,149. Therefore, the monetary impact of this deficiency does not exceed the reporting threshold of $25,000. Perspective Information: The audit included a detailed testing of 5 files for students participating in the Federal Work Study program during the 2024‐2025 award year, and limited detail testing of an additional 6 students’ Federal Work Study documents pertaining to this specific attribute. For the 11 students tested, auditors vouched class schedules, timecards, and paystubs for two specific pay periods, one in each semester. Of these students for the specific pay periods tested, overlap between submitted work study hours paid and classes scheduled without reasonable exception was identified in the records for 2 students. Therefore, we consider the error rate as 18.18%. Cause and Effect: In one case of conflicting times, the student’s professor could not verify whether there had been changes to their regularly scheduled class time to vouch for reasonable exemption for an allowable overlap in time; in the second case, the student manually entered their time for submission, mistakenly overlapping with the beginning of their scheduled class for multiple days during their first week employed. In both instances, supervisors did not identify the conflicts when reviewing and submitting timesheets for payroll processing and funds were paid to the students for the overlapping times, which is prohibited without an adequate exemption that has been appropriately documented. Recommendation: The University should ensure that proper safeguards, in both software and personnel, are in place to prevent, identify, and remediate such errors to prevent over‐payment of federal aid funds. View of Responsible Officials: Management concurs with the auditor’s finding. Due to incomplete documentation of reasonable exemptions, students were paid Federal Work Study funds for time worked during regularly scheduled class meeting times. Corrective action has been implemented to ensure such conflicts are prevented in the future.

2024-001 Significant Deficiency: Disbursement Notifications (U.S. Department of Education, William D. Ford Direct Loan Program, ALN #84.268) Criteria: In accordance with 34 CFR 668.165, a University, except in the case of a post-withdrawal disbursement, if an institution credits a student ledger account with Direct Loan, the institution must notify the student or parent of: the anticipated date and amount of the disbursement; the student's or parent's right to cancel all or a portion of that loan or loan disbursement, and have the loan proceeds returned to the Secretary; and the procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement. Statement of Condition: During the audit, it was noted that disbursement notifications provided by the University did not include the amount of the disbursements. Questioned Costs: Such information is not applicable for this finding since it is nonmonetary in nature. Perspective Information: The audit included a detailed testing of files for 31 students, to which direct loan funds were disbursed. This significant deficiency applies to all 31, indicating an error rate of 100%. Cause and Effect: This issue is caused by an oversight in the development of the template for disbursement notifications sent automatically by the system when credits are made to a student’s account. The issue results in lack of transparency between the institution and the student regarding their financial aid. Recommendation: The University should update the template utilized by the system to generate disbursement notifications to include specific amounts of each type of aid applied to the student’s account. View of Responsible Officials: The University of the Cumberlands acknowledges the finding that electronic disbursement notifications sent to students were missing dollar amounts in the body of the letters. Upon identification of this deficiency, immediate corrective actions were taken in collaboration with software engineers to rectify the notification process before the disbursement of Federal Direct Loans for Fall 2024. The template was promptly updated, and thorough testing was conducted to verify that all required information, including loan type, date, amount, and other pertinent details, would be accurately communicated to students. Going forward, this process will be systematically tested and reviewed each semester to ensure continued compliance. As of the Fall 2024 semester, all students have received the required disbursement notifications that fully adhere to regulatory requirements.

2022-001 Significant Deficiency: National Student Loan Data System (NSLDS) Report (U.S. Department of Education, William D. Ford Direct Loan Program, ALN #84.268 and Federal Pell Grant Program, ALN #84.063) (Repeat Finding 2021-001) Criteria: In accordance with 34 CFR 668.22(c) a student's withdrawal date is: (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification, the mid-point of the payment period; (4) if the institution determines that a student did not begin the institution's withdrawal process or otherwise provide official notification to the institution of his or her intent to withdraw because of illness, accident, grievous personal loss, or other such circumstances beyond the student's control, the date that the institution determines is related to that circumstance; (5) If a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if a student takes a leave of absence that does not meet certain requirements, the date that the student began the leave of absence. Statement of Condition: During the 2022 audit, it was noted that the University reported the incorrect date to NSLDS for the withdrawal date. Questioned Costs: Such information is not applicable for this finding since it is nonmonetary in nature. Perspective Information: The 2022 audit included a detailed testing of 40 student files, of which this significant deficiency applies to 4, indicating an error rate of 10.00%. Cause and Effect: The University used the incorrect withdrawal date in some instances, resulting in misrepresentation within the NSLDS system. Recommendation: The University should ensure that the correct withdrawal date is reported to NSLDS. View of Responsible Officials: The University of the Cumberlands has reviewed the NSLDS reporting procedures surrounding unofficial withdrawals and recognizes a deficiency. The Registrar?s Office and Financial Aid Office have determined the need for a supplemental enrollment reporting file after the end of each semester to automate the reporting of unofficial withdrawals. This additional file will lessen the number of manual corrections to withdrawal dates in NSLDS, thus increasing the level of accuracy in reporting.

2021-001 Significant Deficiency: National Student Loan Data System (NSLDS) Report (U.S. Department of Education, William D. Ford Direct Loan Program, CFDA #84.268 and Federal Pell Grant Program, CFDA #84.063) Criteria: In accordance with 34 CFR 668.22(c) a student's withdrawal date is: (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification, the mid-point of the payment period; (4) if the institution determines that a student did not begin the institution's withdrawal process or otherwise provide official notification to the institution of his or her intent to withdraw because of illness, accident, grievous personal loss, or other such circumstances beyond the student's control, the date that the institution determines is related to that circumstance; (5) If a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if a student takes a leave of absence that does not meet certain requirements, the date that the student began the leave of absence. Statement of Condition: During the audit, it was noted that the University reported the incorrect date to NSLDS for the withdrawal date. Questioned Costs: Such information is not applicable for this finding, due to the fact that it is nonmonetary in nature. Perspective Information: The audit included a detailed testing of 40 student files, of which this significant deficiency applies to 7, indicating an error rate of 17.50%. Cause and Effect: The University used the incorrect withdrawal date in some instances. Recommendation: The University should ensure that the correct withdrawal date is reported to NSLDS. View of Responsible Officials: The University of the Cumberlands reviewed enrollment reporting practices and have identified clerical errors that led to the finding. The University has implemented a plan for the accurate and timely reporting of the withdrawal date for unofficial withdrawals. The Financial Aid and Registrar's office will conduct a secondary review of the NSLDS data entered each semester to ensure compliance.

2019-001 Significant Deficiency: National Student Loan Data System (NSLDS) Report (U.S Department of Education, William D. Ford Direct Loan Program, CFDA #84.268 and Federal Pell Grant Program, CFDA #84.063) (original finding number 2017-011) Criteria: In accordance with 34 CFR 685.309(b) and 34 CFR section 690.83(b)(2), for Direct Loans and Pell grants, respectively, once the Enrollment Reporting roster file is received from the NSLDS, the institution must update the Enrollment Reporting roster file for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes to NSLDS. Statement of Condition: During the audit, it was noted that the University incorrectly reported student status changes for students who received Direct Loan and Pell grant disbursements. Questioned Costs: Such information is not applicable for this finding, due to the fact that it is nonmonetary in nature. Perspective Information: The audit included a detailed testing of 40 student files, of which this significant deficiency applies to 11, indicating an error rate of 27.50%. Cause and Effect: Students? enrollment data was incorrectly identified and reported to NSLDS. The Power Campus Software was unable to identify students that simultaneously withdrew and dropped courses form adjoining modules. The result was incorrect reporting of enrollment data. Recommendation: The University should ensure that the appropriate data is submitted to the NSLDS in order to ensure correct student status reporting. View of Responsible Officials: The University of the Cumberlands recognizes the importance of accurate reporting of enrollment data. As such, with the aid of an outside consulting firm FocusEdu an internal review of our current and past practices was conducted to identify and correct any issue that could lead to any future findings. Additionally, interdepartmental meetings were conducted to establish roles, scrutinize processes, setups and look for areas that could present repeat enrollment findings. Finally, with our transition to Banner integrated software we have leveraged their experts in registration and financial aid in our setup for proper reporting.

2019-002 Material Weakness: Direct Subsidized Loans Exceed Annual Limit (U.S Department of Education, William D. Ford Direct Loan Program, CFDA #84.268) Criteria: In accordance with 34 CFR 685.203, annual amounts that students can be awarded for Direct Loan funds is dependent, in part, on the students? grade level. Statement of Condition: During the audit, it was noted that the University awarded one student in excess of the annual loan limit for Subsidized Direct Loans, based on that student?s grade level. Questioned Costs: The known monetary error was $442, which resulted in an extrapolated error of $46,089. Perspective Information: The audit included a detailed testing of 40 student files, of which this material weakness applies to 1, indicating an error rate of 2.50%. The relevant population in which this error was extrapolated consisted of all students who had received Subsidized Direct Loans. We consider this sample to be statistically valid. Cause and Effect: This finding is a result of the loan processor not following established packaging rules that did not allow for progression of loan limits based on grade level until the student had earned the required credit hours. This caused the student to be over awarded according to grade level. Recommendation: BCS recommends that the packaging rules be followed so that students are awarded appropriately based on the credit hours earned. View of Responsible Officials: Staff will receive continual training on packaging polices, rules and procedures. Students earned credit hours will be checked against grade level and potential over awards will be reviewed and corrected prior to disbursing funds.

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