Art Center College of DesignHigher Education

Special Tests and Provisions – Enrollment Reporting: Significant Deficiency in Internal Control over Compliance (See table in Schedule of Findings and Questioned Costs). Criteria – 34 CFR section 668.22(c): For a student who ceases attendance at an institution that is not required to take attendance, the students’ withdrawal date is: (v) 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 (vi) if a student takes a leave of absence that does not meet the requirements of an approved leave of absence, the date that the student began the leave of absence. Condition/context – A sample of 70 federal aid recipient students were selected from system-generated reports of students who graduated, reported a physical address change, withdrew, or dropped during the 2023-2024 academic year. The enrollment information and withdrawal, address change, or graduation date per Art Center’s records was compared to the information reported to the National Student Loan Data System (NSLDS) in order to determine if status changes were reported within the required timeframes. Of the 70 students who had a change in address, graduated, or withdrew, 5 withdrawn students had an incorrect effective date reported to NSLDS. Cause – For students who did not return from an approved leave of absence or those that took a leave of absence that did not meet the requirements of an approved leave of absence, predominantly being leaves of absences in excess of 180 days in any 12-month period, Art Center did not consistently report to the NSLDS the effective date of the withdrawal as the date the student began the leave of absence. Effect – The NSLDS database did not include accurate information for when the student was considered to be withdrawn from Art Center. This information is utilized by ED, the Direct Loan program, lenders, and other institutions to determine in-school status, deferment, and grace periods of student loans. Incorrect information could result in incorrect deferment, grace periods, billing, and repayment of student loans. Repeat finding – This is not a repeat finding. Recommendation – We recommend Art Center establishes a formal policy requiring students who do not return from an approved leave of absence, or students who begin a leave of absence planned to span more than 180 days in any 12-month period, be immediately reported to the NSLDS as a withdrawn student effective the date their leave of absence began. Views of responsible officials and planned corrective actions – Art Center management acknowledges that some incorrect Enrollment Reporting data were transmitted through the National Student Clearinghouse (NSC) to the National Student Loan Data System (NSLDS). However, this error was not due to any insufficiencies in ArtCenter’s policies; rather, it was due to a technical misunderstanding regarding which data fields are extracted for NSC reporting. More specifically, if a student takes a second Leave of Absence (LOA), it had been ArtCenter’s practice to record the student’s actual last date of attendance in the “Last Date of Attendance” field on the Student Hiatus Summary screen in Colleague, but the file that NSC requires schools to use to extract reporting data does not pull data from this field; as a result, the resulting reported information was inaccurate. Art Center now will modify its process to record the date of a student’s first LOA in the “Start Date” field for the second LOA so that the correct data will be extracted and submitted to NSC. Art Center also will be conducting appropriate testing to ensure the adequacy of this process modification.

FINDING 2022-001 ? Eligibility ? Significant Deficiency in Internal Control over Compliance: "See Schedule of Findings and Questioned Costs for chart/table" Criteria: According to 34 CFR 690.63 students may qualify for a maximum Pell award of $6,495 for an award year. The maximum amount is awarded to students with a zero Expected Family Contribution (EFC) and full-time enrollment status. Students with less than full-time enrollment or more than a zero EFC are eligible for a reduced Pell award. Condition/context: In testing eligibility, we selected a sample of 45 students out of a population of 985 who had received federal financial aid during the 2021-2022 fiscal year as identified by internal records. We compared the student's enrollment information and award disbursement information to determine whether students were eligible for all the aid received. We noted one selection where a student received a Pell award that was $200 higher than what the student was eligible for based on their EFC and cost of attendance. Questioned costs: $200. There are no other likely questioned costs. Effect: The student received an incorrect amount of Pell award and was over awarded an amount of $200, which is considered a questioned cost and was subsequently returned to the U.S. Department of Education in July 2022. Cause: This student's file included professional judgement adjustments that were made to the file in June 2022 by a new counselor in training. This resulted in many changes to the file including reducing the PLUS Loan and increasing the Pell award. There were retroactive changes to the file which made it more complicated than usual. When working with Pell awards, staff normally rely on the Pell auto-package functionality within the Colleague system. In this case, the counselor was conscious of the 30-day disbursement COD warning and entered the additional term awards manually to create the new disbursement amounts with the current date. Repeat finding: This is not a repeat finding. Recommendation: We recommend counselors always use the Pell auto-package functionality within the Colleague system. Views of responsible officials and planned corrective actions: Management agrees with the finding and recommendation and will ensure automated controls within the Colleague system are utilized for all awards and subsequent changes to award amounts.

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