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Report File
Date Issued
Submitting OIG
Department of Education OIG
Agencies Reviewed/Investigated
Department of Education
Report Number
I24GA0163
Report Description

The U.S. Department of Education (Department) is responsible for minimizing the risk that Federal funds will be lost when an Institution of Higher Education (IHE) stops participating in the programs authorized by Title IV of the Higher Education Act of 1965, as amended. When an IHE stops participating in Title IV programs, either voluntarily or involuntarily (due to closure or other circumstances), the closeout procedures it is required to perform and the liability assessment processes Federal Student Aid (FSA) performs, identify any program funds the IHE is required to return to the Department. If the required closeout procedures are not completed, an alternative assessment is conducted by FSA to determine whether the IHE must return program funds to the Department. We performed our inspection to determine the results of the Department’s processes for assessing and recouping liabilities from IHEs that closed from October 1, 2020, through September 30, 2023. We found that the Department has processes in place for assessing and recouping liabilities from IHEs that close. Based on these processes FSA’s School Participation Divisions (SPD) determined that as of March 2024, 47 of the 161 IHEs that closed between October 1, 2020, and September 30, 2023, should repay the Department a total of $34,593,135 in Title IV program funds. These processes also led to FSA’s SPDs assessing liabilities totaling $30,507,138 during the period we reviewed for 13 of the 19 closed IHEs we selected for review. The Department’s Office of Finance and Operations recouped a total of $812,998 of those liabilities from 8 of the 13 IHEs. However, despite these efforts, we found that five of the seven sampled SPDs that oversee IHEs and that we included in our review did not always follow the established processes to timely determine whether liabilities should be assessed against IHEs that closed. These processes are necessary to timely determine closed schools’ liabilities and to make those determinations in a manner consistent with established guidance. We did not identify any issues with the Department’s actions to recoup liabilities from the IHEs we sampled in our review.

Report Type
Inspection / Evaluation
Agency Wide
Yes
Number of Recommendations
6
Questioned Costs
$0
Funds for Better Use
$0
Report updated under NDAA 5274
No

Open Recommendations

This report has 6 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
2.1 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA—Develop and implement controls to ensure policies and procedures related to the time frames for draft final audit determination letters for close-out audits, Missing Audit PRRs, and PRRs for closed school loan discharges are followed and completed timely, including updating policies and procedures to reflect the risk-based approach FSA uses to prioritize its oversight of IHEs participating in Title IV programs.

2.2 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA— Establish and review performance measures and indicators for the timely issuance of draft final audit determination letters for close-out audits of closed IHEs, Missing Audit PRRs, and PRRs for closed school loan discharges.

2.3 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA—Evaluate whether the staffing level assigned to final audit determinations for close-out audits of closed IHEs, Missing Close-Out Audit Program Reviews, and Closed School Loan Discharge Program Reviews is sufficient to timely and effectively assess liabilities for IHEs that close, and if not, develop and implement a plan of action to address the issue.

3.1 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA—Develop and implement controls to ensure SPD closed school analysts provide FSA closed school stakeholders with required notifications, including the Acknowledgement of Intent to Close notice and the Closed School Email Alert; or specify in its policies and procedures situations that do not require the notifications.

3.2 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA—Evaluate whether the staff assigned to issue the Acknowledgement of Intent to Close notice, Closed School Email Alert, and Close-Out Reminder letter is sufficient to timely and effectively notify FSA closed school stakeholders and closed IHEs, and if not, develop and implement a plan of action to address the issue, including updating the policies and procedures to align with FSA’s priorities, available staffing levels, and prescribed time frames as necessary.

3.3 Yes $0 $0

We recommend that the Acting Chief Operating Officer for FSA—Establish and review performance measures and indicators for the timely issuance of the Acknowledgement of Intent to Close notice, Closed School Email Alert, and Close-Out Reminder letters.

Department of Education OIG

United States