KENTUCKY STATE UNIVERSITY Schedule of Findings and Questioned Costs, continued

Year ended June 30, 2014

Section III - Federal Award Findings and Questioned Costs (under Section .505(d)(3) of OMB Circular A-133): Finding 2014-003

Finding 2014-003:

Federal Program: U.S. Department of Education Federal Direct Student Loans Program, CFDA 84.268

Condition:

During our testing of the Direct Loan program we noted that the University did not notify the guaranty agency of student status changes (students unofficially withdrawing or graduating) in a timely manner.

Criteria:

Per 34 CFR 685.309, unless the school expects to complete its next enrollment report within 60 days, the school must notify the lender or the guaranty agency within 30 days, if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis. The school is responsible for timely reporting whether they report directly or via a third party servicer.

Cause:

The College did not have a control in place to ensure that timely reporting of all status changes is occurring or that the proper status is being reported.

Effect:

By not reporting student status changes to the guaranty agency in a timely manner, the student's repayment period may not begin at the appropriate time as required by the regulations.

Management Response:

The University concurs with the auditors' finding. All schools participating (or approved to participate) in Federal Student Aid (FSA) programs must have a control in place to ensure timely reporting of student enrollment data to the National Student Loan Data System (NSLDS).

Plan of action: To comply with federal regulation 34 CFR 685.309, Kentucky State University will take the following actions to resolve the finding:

  1. Assign a single point of accountability for the enrollment report [Task complete. The Office of the University Registrar's Systems Analyst has been assigned to this task.]
  2. No later than January 15, 2015, the University Registrar will develop a policy and procedure regarding the reporting of unofficial withdrawals to the National Student Clearinghouse.

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