Board of Trustees of the Leland Stanford Junior UniversityHigher Education

Verification status code within the Common Origination and Disbursement System Cluster: Student Financial Assistance Sponsoring Agency: Department of Education Award Name: Pell Grant Program Award Number: Various Assistance Listing Title: Federal Pell Grant Program Assistance Listing Number: 84.033 Award Year: 2023-2024 Pass-through entity: Not applicable Criteria For each Federal Pell Grant award disbursed to a student selected for verification, a school must report the student’s verification status to the Department of Education via the Common Origination and Disbursement (COD) System. To do this, the school includes a verification status code (“W,” “V,” or “S”) in the Common Record document it submits to the COD System via batch processing or when it creates the award online via the COD website. (34 CFR 668.56) Condition Through testing of 25 students selected for verification by the Department of Education (ED), we noted the verification status code was not reported to the COD for four samples: • For one sample selection, the student was selected for verification by the ED but was not verified until December 2024, which was after the first disbursement of financial aid to this student in Fall 2023. • For three sample selections, the school provided evidence the University performed verification procedures timely, but did not update the Verification Status code appropriately. Cause Through discussion with the University student financial aid personnel, in the first instance, the late verification process was due to understaffing within the Law School financial aid office. The insufficient number of staff members available to handle the volume of work led to delays in processing verifications, thereby impacting the overall efficiency and effectiveness of the financial aid administration. For the other 3 instances, the failure was attributed to a staff member who did not adhere to established procedural guidelines on how to input data into PeopleSoft, so that the verification status is properly transmitted to the COD. Effect Failure to verify students selected for verification prior to disbursement can result in the affected student losing funding or being required to repay financial aid. Additionally, not communicating verification completely and accurately through the COD, results in the ED not being made aware that students were indeed verified, as required. Questioned Costs None noted. Recommendation We recommend the University implement staffing contingency enhancements to mitigate issues in the future. Additionally, the University should establish a process to ensure that all students selected for verification by the ED are indeed verified and that staff are following existing procedures to ensure that verification statuses are sent to the COD as appropriate. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.

Enrollment Reporting Cluster: Student Financial Assistance Sponsoring Agency: Department of Education Award Name: Pell Grant Program and Federal Direct Student Loans Award Number: Various Assistance Listing Title: Federal Pell Grant Program and Federal Direct Student Loans Assistance Listing Number: 84.033 and 84.268 Award Year: 2023-2024 Pass-through entity: Not applicable Criteria Institutions must review, update, and certify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDS). There are two categories of enrollment information, “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. (34 CFR 685.309) Additionally, when a Direct Loan was made to or on behalf of a student who was enrolled or accepted for enrollment at the institution, and the student ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended; or a student who is enrolled at the institution and who received a loan under Title IV has changed his or her permanent address, the institution must report the change in its next updated Enrollment Reporting Roster file (due within 60 days of the change). (34 CFR 685.309) Condition Through testing of 25 students of enrollment status changes, we noted the following: • Six out of 25 students selected displayed status change effective dates per the respective student file that did not match either program level information, campus level information, or both. • Two out of 25 students enrolled in multiple programs selected displayed a graduation status per their respective student file that was not reported in the NSLDS program level data or campus level data. Cause Per discussion with the University personnel noted the following: • The date inconsistencies arise from the data flows and processes between the third-party service organization they employ and PeopleSoft, rather than from errors in the student records themselves. Management is actively reviewing this issue to identify the root cause. • The graduation status for both students was reported by the University to their third-party servicer, however, the third-party servicer does not apply graduation status for students enrolled in multiple programs. Instead, an error file in these instances is provided to the University to manually resolve. The University was not aware of the need to manually update graduation status in these instances and as such, did not review and update the student records based on the error file received. Effect The effective management of Title IV loans may be compromised if changes in students' enrollment status are not reported promptly and accurately. Precise enrollment data is crucial because a student's enrollment status determines eligibility for in-school deferment, grace periods, repayment schedules, and the Government's payment of interest subsidies. Questioned Costs None noted. Recommendation We recommend that management establish controls to promptly detect and address inconsistencies in enrollment reporting to ensure timely and accurate updates to NSLDS. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.

Finding 2021-001 ? Entrance Counseling not Completed Prior to Disbursing Direct Loans Cluster/Grantor: Student Financial Assistance/Department of Education Award Name: Federal Direct Student Loans Award Year: September 1, 2020 ? August 31, 2021 Award Number: N/A Assistant Listing Number: 84.268 Criteria Under the Federal Direct Student Loan programs, a school must ensure that entrance counseling is conducted with each Direct Subsidized Loan, Direct Unsubsidized Loan or graduate or professional student Direct PLUS student borrower prior to making the first disbursement of the proceeds of a loan to a student borrower unless the student borrower has received a prior Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized or Unsubsidized Federal Stafford Loan, Federal SLS Loan or Direct PLUS Loan or student Federal PLUS Loan. (34 CFR 685.304 (a-b)) Condition We selected a sample of 60 students to test federal student financial aid disbursements and noted one instance where the financial aid recipient did not receive entrance counseling prior to the first disbursement of their direct loan. For this exception, the student received $20,284 in direct unsubsidized loan funds and $116,271 direct plus loan funds. Cause We understand the identified instance of required entrance counseling was missed due to a PeopleSoft configuration issue in fiscal 2021, which did not appropriately identify the status of entrance counseling completion. Effect Student aid could have been disbursed to student borrowers who did not understand the responsibilities associated with receiving student loans. Questioned Costs: $136,555 Recommendation We recommend Stanford evaluate its systematic controls and processes to ensure all students requiring entrance counseling under the regulations are identified and receive counseling prior to any applicable disbursements being made. Management?s Views and Corrective Action Plan Management?s views and corrective action plan are included at the end of this report after the Summary Schedule of Status of Prior Audit Findings.

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