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Audit finds errors in IU financial aid awards
(Herald-Times (Bloomington, IN) (KRT) Via Thomson Dialog NewsEdge) Jun. 1--Indiana University awarded students $273,889 in excess financial aid as a result of confusion that accompanied its switch two years ago to a PeopleSoft student-information system, according to a recent audit.
And IU officials are still working to resolve the issues, implementing a "corrective action plan" that includes tightening internal controls and repaying the government for excessive aid awards.
Students will not be required to refund any overpayments, officials said.
"We do need to improve our business processes, and we are working very hard to do that," said Art Lindeman, associate vice president and director of student enrollment services.
An audit report last month by the State Board of Accounts identified instances in which IU was out of compliance with federal financial-aid regulations in the fiscal year from July 2004 to June 2005, a time when the university received $65.1 million in federal aid funds.
Auditors found that, on some occasions, IU failed to consider scholarships and grants that students were receiving when it calculated their eligibility for federal aid. The failure resulted in "over-awards" to the students, the report said.
Also, some students who were awarded federal Pell grants didn't enroll in classes, but the grants weren't refunded, the audit found. It found incorrect charges and housing allowances at some IU campuses.
Officials blamed incomplete or inaccurate information in internal reports that were generated as the PeopleSoft system was being implemented.
IU spent $52 million over six years to convert from its legacy student information system to the PeopleSoft product. Oracle Corp. acquired PeopleSoft December 2004.
Financial aid was the final IU module to shift to PeopleSoft, after admissions and registration, and seemed to cause the most problems. In 2004, it caused delays in notifying admitted students of how much financial aid they would receive, resulting in an enrollment shortfall that cost IU Bloomington millions of dollars in lost tuition. That fall, students at IU-Purdue University in Indianapolis had to get short-term loans when their aid checks weren't disbursed in time to pay tuition bills.
Lindeman moved to his current job a year ago. Last summer, he contracted with financial-aid consultant Nancy Sinsabaugh to evaluate the system. She said someone should be in charge of financial aid at the university level, and in February IU hired Jim Kennedy, a veteran of PeopleSoft conversions at North Dakota State University and the University of Minnesota, as director of financial aid.
Also, IU worked with the National Association of Student Financial Aid Administrators to have peer institutions look at aid systems at the Bloomington, Southeast, Northwest and IUPUI campuses.
"These were very thorough reviews. I got 100 pages of recommendations," Lindeman said.
Officials said federal aid regulations are complex, and it's not uncommon for audits to turn up problems. But IU trustees, hearing the findings last month, worried the university could clash with U.S. Department of Education officials responsible for awarding federal funds.
"If we get on the wrong side of these guys, we're going to be in trouble," said trustee Tom Reilly. "We have to be cleaner than Caesar's wife."
IU's corrective action plan calls for reviewing student financial-aid awards from 2004-05, adjusting those that were incorrect and improving the internal reports. Overpayments that have to be refunded to the government will be paid by the university.
Jan Correll, supervisor of university accounts with the State Board of Accounts, said IU staff were taking the situation seriously and the university is unlikely to face federal penalties.
"They were, I think, as surprised that some of these gaps occurred as we were, and disappointed that they hadn't noticed it before," Correll said.
In brief
A recent audit found instances in which IU was out of compliance with federal regulations for federal aid awarded in 2004-05. University officials blame the problems on the switch to a new student- information system.
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