Appendix O. Sample Final Program Review Determination

Mr. William Smith, President CERTIFIED MAIL

The School of Practical Nursing Return Receipt Requested

### 1 North Avenue REF: OPEID#

New York, N.Y. 10007 PRCN 199840200000

Dear Mr. Smith:

This office has reviewed Ms. Norton's letter dated February 10, 2000, in
response to the remaining issues from the November 14, 1998 Title IV
program review report. That report covered The School of Practical
Nursing's (TSPN) administration of the Federal Title IV, HEA programs
during the 1997/98 and 1998/99 award years.

We have made final determinations for all program review findings. The
purpose of this letter is to (1) identify the liabilities due from TSPN;
(2) provide instructions for the payment of liabilities to the
Department of Education (ED) and holders of the FFEL; and (3) notify you
of your right to appeal. This final program review determination letter
contains an appendix, which includes a list of all Title IV aid
recipients sampled for the 1997/98 and 1998/99 award years.

TSPN should be aware that repeat findings in future program reviews or
failure to resolve satisfactorily the findings of this program review
may lead to administrative proceedings to fine, limit, suspend or
terminate the institution pursuant to 34 CFR, Part 668, Subpart G of the
Student Financial Assistance General Provisions regulations.

Additionally, this office will recommend that an Institutional
Improvement Specialist contact TSPN to discuss the institution's
technical assistance needs.

The institution has taken the required corrective actions to resolve
findings \# 3, and 5. Therefore, those findings are closed. The
consequences of the program violation identified in findings #1, 2, and
4, are as follows.

# **FINDINGS AND FINAL DETERMINATIONS**

#### Finding

**[1. Incomplete Verification]{.underline}**

TSPN failed to complete verification for several students in the review
sample who were selected for verification.

TSPN failed to collect copies of both sides of student #22's tax
returns. Furthermore, the student reported that she received \$800 in
child support on her verification worksheet. However, the child support
had not been included on her Student Aid Report (SAR). There was no
documentation in the student's file that calculations had been performed
to determine whether this revised information affected her eligibility.

For student #16, the only verification documentation in her file were
copies of her 1996 W-2 earnings statements. However, the student
reported on her SAR that she and her spouse filed a tax return in 1996.
The W-2 can only be accepted in place of a Federal tax return if the
institution can document that the student could not provide a copy of
the tax return, even after attempts to collect the document from the
IRS. Also, there was no verification worksheet in her file, so the
student's household size was not verified.

Side two of student #27's tax return was missing, and her tax return
showed that she and/or her husband received \$1475 in untaxed pension
funds in 1997. These funds should have been reported as untaxed income
on her SAR, but were not. The only exception to including these funds as
untaxed income would be if the funds were "rolled-over" into another
qualified pension plan, such as an IRA. There was no documentation that
this was the case, nor was there any evidence that calculations had been
performed to determine whether the student's eligibility was affected by
the revised information.

Similar findings were noted for students #12, 15, and 25.

An institution is responsible for verifying the information that is used
to calculate an applicant\'s Pell Grant Index (PGI)/Expected Family
Contribution (EFC) as part of the determination of need for student
financial assistance, for certain students who are selected for
verification by the Department. See 34 CFR § 668.54. Information is
verified by securing additional documentation or, in some cases, a
signed statement attesting to the accuracy of the information provided.
34 CFR § 668.56 and § 668.57. Once the required documentation is
received, the institution must determine whether any of the data
elements reported on the ISIR are incorrect and, if so, calculations
must be performed to determine if the students' eligibility is affected.
34 CFR § 668.59.

Failure to complete verification could result in students receiving
funds they are not entitled to, and create a financial burden for ED.

#### Final Determination

In response to this finding, TSPN was required to ensure that all
persons responsible for the awarding of Title IV funds are familiar with
the regulatory requirements, especially those relating to verification
guidelines.

Furthermore, due to the pervasive nature of this finding, TSPN was also
required to review the files of all students who received Title IV
funds, and were selected for verification during the 1997/98 and 1998/99
award years. The institution was then afforded the opportunity to
collect any required documentation that was missing and perform any
required need analysis calculations if the documentation revised any of
the data originally reported.

As a result of the file review, TSPN identified several additional
students who had not completed verification. The institution was able to
collect the required documentation and confirm the eligibility for most
of the students.

However, documentation submitted for student #31 showed that the
student's Pell Grant eligibility was reduced by \$100. Additionally,
TSPN was unable to collect all required documentation for students #16
and 22, resulting in the following liabilities:

-student #16 \$ 845 Pell Grant \$1,312 FFEL

-student #22 1,170 Pell Grant 2,625 FFEL

Detailed instructions for the payment of this liability are contained in
the [Payment Instructions]{.underline} section of this letter.

#### Finding

**[2. Unresolved Conflicting Information]{.underline}**

The reviewers found that TSPN had failed to resolve conflicting
information found in two student's files.

Student #17's file contained a copy of her 1996 federal tax return. That
tax return showed that she received a \$716 earned income credit in 1996
that was not reflected on her SAR. Although the student was not selected
for verification, TSPN was required to review the information that was
in her file to determine if it showed any inconsistent information. The
institution should have performed a revised need analysis to determine
the effect the earned income credit would have on the student's
eligibility, but it did not. TSPN performed a revised need analysis
during the review, which showed the student's Pell Grant eligibility was
reduced from \$2190 to \$1990**.**

A similar issue was noted in student #19's file.

An institution must resolve any discrepant information prior to
disbursing any Title IV funds to students. See 34 CFR § 668.16(f).

Failure to resolve conflicting information may result in students
receiving funds they are not entitled to, and create a financial burden
for the Department.

#### Final Determination

As a result of this finding, TSPN was instructed to implement procedures
to ensure that all information collected for students is evaluated to
determine its impact on a student's eligibility.

The institution was able to resolve the discrepancy for student #19.
However, TSPN was unable to resolve the discrepancy for student #17 and
is therefore liable for the \$200 Pell Grant overaward for student #17.

Detailed instructions for the payment of this liability are contained in
the [Payment Instructions]{.underline} section of this letter.

#### Finding

**[4. Incorrect Refund Calculations]{.underline}**

TSPN did not perform a proper refund calculation for student #1, who
withdrew from school on 3/14/98.

The school had determined that no refund was due after the student's
tuition was adjusted to account for the withdrawal. However, TSPN failed
to consider cash payments the student was expected to make when
calculating whether a refund was due to the Title IV programs.
Regulations published on 4/29/94, effective 7/1/94, state that "\...an
institution may not include any unpaid amount of a scheduled cash
payment in determining the amount that an institution may retain for
institutional charges" See 34 CFR § 668.22(g)(2)(ii)). Once it has been
determined how much the student still owes the school after tuition
charges have been adjusted, the student is expected to pay the amount of
cash that he/she was scheduled to at the beginning of the enrollment
period. The fact that the student withdrew should not reduce his/her
obligation to make the expected payments. Only after the student has
paid the expected share should Title IV funds be applied.

Additionally, TSPN was not considering the Federal refund criteria when
performing refund calculations. The regulations at 668.22(b) specify
that the institution must consider the federal refund criteria (defined
at 668.22(d)) when the pro rata refund requirements do not apply, and
there are no specific refund standards established by its accrediting
agency or under state law. The school would than be required to pay the
refund based on the criteria that is most beneficial to the student. The
Director acknowledged that the federal refund criteria were not
considered at TSPN.

Failure to make proper refunds may result in the institution retaining
funds it is not entitled to and cause increased expense for ED.
Additionally, an institution's failure to make adequate refunds of FFEL
funds to students' lenders may increase the possibility of default,
which also causes increased expenses to ED.

#### Final Determination

As a result of this finding, TSPN was required to revise its refund
procedures, to ensure that all regulatory provisions are addressed.

As a result of applying the regulatory provisions, it was determined
that TSPN was required to pay an \$781 refund to the FFEL program for
student #1.

Detailed instructions for the payment of this liability are contained in
the [Payment Instructions]{.underline} section of this letter.

**[SUMMARY OF LIABILITIES]{.underline}**

The total liabilities resulting from this final program review
determination are as follows:

[Finding \# Pell Grant FFEL Total]{.underline}

1 \$ 2,115 3,937 \$ 6,052

2 200 0 200

4 [0 781 781]{.underline}

Total \$ 2,315 4,718 7,033

**[PAYMENT INSTRUCTIONS]{.underline}**

TSPN must pay the \$4,718 FFEL liabilities to the current holders of the
loan debts for the applicable students identified in this FPRD. TSPN
must provide proof (copy of the canceled checks, front and back) that
payment was made to the holder(s) of the loans within 45 days of receipt
of this letter, to the following address:

Program Reviewer

U.S. Department of Education

75 Park Place, Room 1206

New York, NY 10007

The total liability to be remitted to the Department of Education based
on this final program review determination is \$ 2,315.

Payment of the \$ 2,315 liability must be made within 45 days by
forwarding a check, made payable to the U.S. Department of Education, to
the following address:

U.S. Department of Education

P.O. Box 952226

St. Louis, MO 63195-2226

To properly identify your institution's payment, and to ensure that the
institution receives credit for the payment, please include the
following information on the check and any accompanying documents:

DUNS Number: XXXXXXXX

TIN: XXXXXXXX

PRCN: 199840200000

If ED does not receive payment within the 45-day period, interest will
accrue in monthly increments, starting with the date of this letter,
until the date of receipt of your payment. If you have any questions
regarding interest accruals or payment credits you may telephone (202)
401-1450 and ask to speak to your institution's account representative.

**Payment Plan:** If full payment to ED cannot be made within 45 days of
the date of this letter, contact the Financial Improvement Receivables
Group at (202) 401-1450 to apply for a payment plan. Interest charges
and other conditions apply.

Written requests may be sent to the address below:

Nancy Hoglund, Supervisor

Financial Improvement Receivables Group

U.S. Department of Education

Room 4C107

400 Maryland Ave., S.W.

Washington, DC 20202-4330

If within 45 days of the date of this letter, your institution has
neither made payment in accordance with the instructions provided, nor
entered into an arrangement to repay the liability under terms
satisfactory to the U.S. Department of Education, ED intends to collect
the amount due and payable by administrative offset against payments due
your organization from the Federal Government. [Your institution may
object to the collection by offset only by challenging the existence or
amount of the debt.]{.underline} Your institution makes this challenge
by timely appealing this determination under the procedures described in
the "Appeal Procedures" section of this letter. The Department will use
those procedures to consider any objection to offset. No separate appeal
opportunity will be provided.

If a timely appeal is filed, ED will defer offset until completion of
the appeal, unless it determines that offset is necessary as provided in
34 CFR § 30.28. This debt may also be referred to the Department of the
Treasury for further action as authorized by the Debt Collection
Improvement Act of 1996.

# **APPEAL PROCEDURES**

This constitutes ED\'s final program review determination with respect
to the liabilities identified from the November 14, 1998, program review
report. If the institution wishes to appeal to the Secretary for a
review of monetary liabilities established by this final program review
determination, the institution must file a written request for an
administrative hearing. ED must receive the request no later than **45
days** from the date the institution receives this final program review
determination. **An original and four copies of the information you
submit must be attached to your request**. Your request for an appeal
must be sent to:

Ms. Mary Gust, Director

Administrative Actions and Appeals Division

U. S. Department of Education

830 First St. NE Rm. 083E1

###  Washington, D. C. 20202

If you hand-deliver your submission, or use an overnight delivery
service other than the U.S. Postal Service, please address your
submission as follows:

Ms. Mary Gust, Director

Administrative Actions and Appeals Division

U.S. Department of Education

830 First St. NE Rm. 083E1

Washington, DC 20002

Your institution's appeal request must: (1) indicate the findings,
issues and facts you dispute; (2) state the institution's position,
together with pertinent facts and reasons supporting its position; (3)
include all documentation it believes the Department should consider in
support of the appeal; and (4) include a copy of this final program
review determination. The program review control numbers (PRCN) must
also accompany your request for review.

If your institution's appeal request is complete and made on a timely
basis, the Department will schedule an administrative hearing in
accordance with Section 487 (b) (2) of the Higher Education Act of 1965,
as amended (HEA), 20 U.S.C. §1094 (b) (2). The procedures followed with
respect to your institution's appeal will be those provided in 34 CFR
Part 668, Subpart H.

Program records relating to the period covered by this program review
must be retained until the later of: resolution of the loan, claim or
expenditure questioned in the program review, 34 CFR § 668.24 (e)(3)(I);
or the end of the retention period applicable to the record under 34 CFR
§ 668.24 (e) (1) and (e) (2).

Your continued cooperation throughout the program review process is
appreciated. If you have any questions, please contact Program Reviewer
at (212) 264-4022. Questions relating to any appeal of this final
program review determination should be directed to the address noted in
the [Appeal Procedures]{.underline} section of this letter.

Sincerely,

Area Case Director

Case Management Division - Northeast

New York Team

cc: Financial Aid Administrator

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**[APPENDIX]{.underline}**

**[Student Name]{.underline}** **[Social Security \#]{.underline}**

**[1997/1998]{.underline}**

1\.

2\.

3\.

4\.

5\.

6\.

7\.

8\.

9\.

10\.

11\.

12\.

13\.

14\.

15\.

**[1998/1999]{.underline}**

16\.

17\.

18\.

19\.

20\.

21\.

22\.

23\.

24\.

25\.

26\.

27\.

28\.

29\.

30\.

[Additional Student Identified in File Review for Finding
#1]{.underline}

31\.