Technical Career Institutes, Inc.’s Administration of the Federal Pell Grant and Federal Family Education Loan Programs

Submitting OIG:

Report Description:

We determined that TCI met requirements in the HEA and regulations for institutional (excluding the 90/10 rule), program, and student eligibility and for award calculations. However, our review disclosed that (1) TCI improperly paid $440,487 to FFEL lenders to pay off its students’ loans and prevent their default; and (2) TCI had internal control deficiencies in the administration of Title IV programs during the period under review.

Date Issued:

Monday, May 19, 2008

Agency Reviewed / Investigated:

Department of Education

Submitting OIG-Specific Report Number:

A02H0007

Component, if applicable:

Federal Student Aid

External entity, if applicable:

Technical Career Institutes, Inc

Location(s):

New York, NY

United States

Type of Report:

Audit

Questioned Costs:

$6,458

Funds for Better Use:

Number of Recommendations:

View Document:

Attachment	Size
a02h0007.pdf	7.4 MB

Additional Details Link:

https://www2.ed.gov/about/offices/list/oig/auditreports/fy2008/a02h0007.pdf

Recommendation Number	Recommendation Status	Significant Recommendation
1.1	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to stop making payments to lenders on students’ loans for the purpose of preventing their default.
1.2	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to identify all of the students for whom it made such payments on or after July 1, 2005.
1.3	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to rescind all collection agency referrals for the affected students;
1.4	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to direct the collection agencies to retract any negative reports made to credit agencies concerning the affected students;
1.5	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to inform the affected students of its improper practice and of their rights and recourses under the HEA and all applicable consumer laws.
1.6	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA recalculate TCI’s cohort default rate for FY 2005, including the borrowers for whom TCI made payments as defaulted for the purposes of the calculation, and take appropriate action under 34 C.F.R. Part 668, Subpart M;
1.7	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA in TCI’s cohort default rate calculations for FYs 2006 and 2007, include as defaulted the borrowers for whom TCI made such payments.
1.8	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA consider limiting, suspending, or terminating TCI’s participation in the Title IV, HEA programs, under 34 C.F.R. Part 668, Subpart G, based on TCI’s practice of making payments on its students’ FFEL Program loans.
2.1	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to develop, implement, and ensure that its personnel adhere to written policies and procedures for the administration of Title IV programs.
2.2	Open	Yes
We recommend that the Acting Chief Operating Officer for FSA require TCI to return to the Department $6,458 ($5,445 in Title IV funds and $1,013 in Pell Grant funds) and applicable interest.

Recommendation Number

Recommendation Status

Significant Recommendation

Additional Details

1.1

Open

Yes

We recommend that the Acting Chief Operating Officer for FSA require TCI to stop making payments to lenders on students’ loans for the purpose of preventing their default.

1.2

Open

Yes

We recommend that the Acting Chief Operating Officer for FSA require TCI to identify all of the students for whom it made such payments on or after July 1, 2005.