> ![](media/image1.pct)**UNITED STATES DEPARTMENT OF EDUCATION**

OFFICE OF INSPECTOR GENERAL

AUDIT SERVICES

Chicago/Kansas City/Dallas Audit Region

> January 21, 2009
>
> **Control Number**
>
> **ED-OIG/A05H0018**

Jonathan A. Kaplan, J.D.

President

Walden University

155 Fifth Avenue South

Suite 100

Minneapolis, Minnesota 55401-2511

Dear Mr. Kaplan:

This **Final Audit Report**, entitled *Walden University's Compliance
with Selected Regulations and U.S. Department of Education Guidance*,
presents the results of our audit. The objective of the audit was to
determine if Walden University resolved comment codes in compliance with
regulations and U.S. Department of Education (Department) guidance. The
period covered by the audit was July 1, 2005, through June 30, 2006
(2005-2006 award year).

BACKGROUND

Walden University (University) is a private, for-profit, distance
learning institution that provides programs at the undergraduate,
graduate, and professional levels. Since 2004, it has been owned by
Laureate Education, Inc. The University is headquartered in Minneapolis,
Minnesota. The records for accounting and administration of student
financial assistance programs are located in Baltimore, Maryland. It
provides 100 percent of its courses online to more than 24,000 students
and offers more than 20 degree programs, including doctoral and master's
degrees in education, management, psychology, health and human services,
and public policy and administration. The University also offers
master's degrees in engineering and applied science, a bachelor
completion program in business, academic certificates for engineering
and IT professionals, self-paced graduate courses for K--12 educators,
and a post-doctoral certificate in psychology. It is accredited by The
Higher Learning Commission and is a member of the North Central
Association of Colleges and Schools (NCACS). The University's M.S.
Nursing program is accredited by the Commission on Collegiate Nursing
Education.

The purpose of the programs authorized by Title IV of the Higher
Education Act of 1965, as amended (HEA), is to provide financial
assistance to students attending eligible institutions of higher
education. The University participates in three Title IV, HEA programs:
Federal Pell Grant (Pell), Federal Work-Study (FWS), and Federal Family
Education Loan (FFEL). Under the FFEL Program, Stafford loans
(subsidized and unsubsidized) are made to students, and PLUS loans
(unsubsidized) are made to graduate students and to parents of dependent
undergraduate students. The federal government pays the interest on a
subsidized student loan during in-school status, the grace period, and
during authorized deferment periods. Borrowers are responsible for the
interest that accrues on an unsubsidized loan throughout the life of the
loan.

During the 2005-2006 award year, the University disbursed the following
amounts of Title IV, HEA program funds:

[Program]{.underline} [Funds]{.underline}

Pell \$ 530,785

FFEL-Stafford Subsidized \$ 98,327,756

FFEL-Stafford Unsubsidized \$130,230,147

FFEL-PLUS \$ 51,337

FWS \$ [9,504]{.underline}

Total \$229,149,529

The Department's Central Processing System (CPS) receives and processes
each student's Free Application for Federal Student Aid (FAFSA) and
correction information. Upon receipt of a student's FAFSA, CPS completes
a series of quality control checks on the application data to identify
incomplete or inconsistent data. CPS also performs database matches with
the Department's National Student Loan Data System (NSLDS) and other
federal agency records to screen for applicant eligibility (for example,
Department of Homeland Security (DHS) and Social Security Administration
(SSA) records). CPS generates a Student Aid Report (SAR)/Institutional
Student Information Record (ISIR) for each student, with comment codes,
also referred to as C codes, that include warning edits, assumptions,
highlights, and reject codes. The comment codes point out possible
questions or identify missing or inconsistent FAFSA data.

In accordance with 34 C.F.R. § 668.16(f), an institution must develop
and apply "an adequate system to identify and resolve discrepancies in
the information that the institution receives from different sources
with respect to a student's application for financial aid under Title
IV, HEA programs." Institutions must retain documentation of the
resolution of SAR/ISIR C codes to comply with the record retention
provisions in 34 C.F.R. § 668.24. Records an institution must maintain
include the SAR/ISIR used to determine eligibility for Title IV, HEA
program funds; application data submitted to the Secretary, lender, or
guaranty agency by the institution on behalf of the student or parent;
and documentation of each student's or parent borrower's eligibility for
Title IV, HEA program funds. The Department provides information and
guidance on how to resolve SAR/ISIR C codes in *The ISIR Guide, SAR/ISIR
Comment Codes and Text,* and *Application and Verification Guide.*

AUDIT RESULTS

The University did not always resolve SAR/ISIR comment codes returned to
the University during the processing of student FAFSAs in compliance
with regulations and the Department's guidance. Specifically, the
University (1) did not adequately resolve all comment codes generated by
CPS after unsuccessful database matches with other federal agencies and
(2) did not adequately resolve comment codes generated after a match
with NSLDS indicated that students were approaching or had exceeded
aggregate loan limits. As a result, the University disbursed \$1,185,473
in unallowable Title IV, HEA program funds. These funds were unallowable
because the University did not resolve SAR/ISIR comment codes as
required to document students' eligibility.

A draft of this report was provided to the University for review and
comment on June 2, 2008. We received the University's comments, along
with additional documentation, on July 11, 2008. In its comments, the
University concurred, in part, and disagreed, in part, with the findings
and recommendations. We summarized the University's comments at the end
of each finding. We also provided our response after the summary of the
University's comments. Based on the University's comments and the
actions it took based on the findings disclosed in the draft audit
report, we revised parts of our original findings and recommendations.

Except for personally identifiable information (that is, information
protected under the Privacy Act of 1974 (5 U.S.C. § 552a)), the entire
narrative of the University's comments is included as Attachment 1 to
this report. All personally identifiable information mentioned in the
University's comments was replaced with bracketed text. Because of the
voluminous nature of the attachments to the University's comments and
the personally identifiable information within, we have not included
them in Attachment 1. Copies of the attachments to the University's
comments, less the personally identifiable information, are available on
request.

FINDING NO. 1 -- The University Did Not Resolve All Comment Codes
Generated after Unsuccessful Database Matches with Other Federal
Agencies

Prior to awarding and disbursing Title IV, HEA program funds, the
University did not always resolve comment codes generated (1) when
students claiming to be eligible noncitizens failed the CPS match with
DHS or (2) when students claiming to be citizens failed the match with
SSA. For the 2003-2004 through 2006-2007 award years, the University
disbursed \$734,212 without documenting that the students were eligible
to receive Title IV, HEA program funds. In late 2007, after we completed
our field work, the University documented the students' eligibility for
\$188,604 of these disbursements.

## Secondary Confirmation of Noncitizen Student Immigration Status Not Performed When CPS Match with DHS Was Unsuccessful {#secondary-confirmation-of-noncitizen-student-immigration-status-not-performed-when-cps-match-with-dhs-was-unsuccessful .RptSubcaption}

The University did not submit required requests for secondary
confirmations to DHS to confirm noncitizen students' eligibility when
the CPS match was unable to confirm that the student was an eligible
noncitizen. If CPS is unable to confirm a student's eligibility
electronically after two attempts, a comment code is added to the
SAR/ISIR indicating that DHS did not confirm the student's statement on
the FAFSA that he or she is an eligible noncitizen. The student is
required to submit proof of noncitizen eligibility, and the University
is then required to begin a secondary confirmation process with DHS. We
reviewed the files for all 17 students for whom, for the 2005-2006 award
year, the University was required to obtain a secondary confirmation to
resolve comment codes. The University did not obtain secondary
confirmations for any of the 17 students.

In accordance with 34 C.F.R. § 668.133(a)

> \[A\]n institution shall require the student to produce the
> documentation required under § 668.33(a)(2) \[for proof of citizenship
> or noncitizenship status\] and request the INS \[Immigration and
> Naturalization Service\] to perform secondary confirmation for a
> student claiming eligibility under § 668.33(a)(2) . . . .

Pursuant to 34 C.F. R. § 668.135

> Within 10 business days after an institution receives the documentary
> evidence of immigration status submitted by a student required to
> undergo secondary confirmation, the institution shall---
>
> \(a\) Complete the request portion of the INS Document Verification

Request Form G-845;

> \(b\) Copy front and back sides of all immigration-status documents
>
> received from the student and attach copies to the Form G-845; and

\(c\) Submit Form G-845 and attachments to the INS District Office.

A University official stated that staff did not understand what was
required for the secondary confirmation. Staff did not follow University
policy and ensure that proof of eligible noncitizenship status was
received, maintained, and confirmed prior to awarding and disbursing
Title IV, HEA program funds.

The 17 students received improper payments of \$257,770 in Title IV, HEA
program loan funds during the 2005-2006 award year. The University also
had disbursed an additional \$420,939 during the 2003-2004, 2004-2005,
and 2006-2007 award years, for a total of \$678,709 of improper
payments. The University submitted secondary confirmation requests to
DHS for the 17 students after we completed our fieldwork. The results of
the 17 confirmations are provided below:

1.  The University was unable to obtain confirmations for 9 students.
    The University disbursed \$346,105 in subsidized and unsubsidized
    loans for these ineligible students for the 2005-2006 through
    2007-2008 award years. Using NSLDS, we confirmed that the University
    subsequently canceled or repaid loan holders \$320,845 of loan
    principal for these students, leaving \$25,260, of which \$5,000 was
    paid off by the Department under the Teacher Loan Forgiveness
    program.

2.  Confirmations were received in late 2007 indicating that 3 students
    were then eligible because they had become citizens. However, the
    confirmations did not identify the dates that the students became
    citizens, so they do not provide any assurance that the students
    were eligible at the time they received their disbursements. These
    three students received \$144,000 in Title IV, HEA program loans
    during the 2003-2004 through 2006-2007 award years.

3.  The University received confirmations that 5 students were eligible
    non-citizens. The documents submitted with the confirmation appeared
    to include the period covered by the loans received. However, the 5
    students had received subsidized, unsubsidized, and graduate PLUS
    loan disbursements totaling \$188,604 before the date the University
    received the confirmations and would have been able to confirm the
    students' eligibility for Title IV, HEA assistance.

## Inadequate Documentation of Student Citizenship Status When CPS Match with SSA Was Unsuccessful {#inadequate-documentation-of-student-citizenship-status-when-cps-match-with-ssa-was-unsuccessful .RptSubcaption}

The University did not provide evidence that it obtained proof of
citizenship status for all students. We randomly selected 100 (of 392)
students with a citizenship comment code that required the University to
obtain proof of citizenship. The Department's *ISIR Guide* provides
examples of documents that may be used to support a student's
citizenship status. Acceptable documentation includes, but is not
limited to, copies of a United States of America Certificate of
Naturalization, certificate of live birth issued by a state or the
United States, United States of America passport, or secondary
confirmation from DHS.

We reviewed 99 students' files (the University could not locate 1
student's file while we were on site) and concluded that 96 files
contained adequate documentation to support the students' citizenship
status. However, 3 of the students' files did not contain documentation
proving United States citizenship. One student's file had no
documentation to support citizenship. A second student's file contained
a copy of a United States of America passport, but the name on the
passport did not match the name on the loan documentation. A third
student's file contained a copy of a certificate of live birth in the
United States, a copy of a marriage record, and a copy of a Social
Security card; however, the name on the marriage record did not match
the name on the live birth certificate, and the name on the Social
Security card did not match the name on the live birth certificate or
the name on the loan documentation.

According to 34 C.F.R. § 668.24(a)(3), "An institution shall establish
and maintain, on a current basis, any application for title IV, HEA
program funds and program records that document . . . \[i\]ts
administration of the title IV, HEA programs in accordance with all
applicable requirements . . . ." According to 34 C.F.R §
668.24(c)(1)(iii), "The records that an institution must maintain in
order to comply with the provisions of this section include but are not
limited to . . . \[d\]ocumentation of each student's or parent
borrower's eligibility for title IV, HEA program funds . . . ."

The University did not follow its own policy to ensure that proof of
citizenship was received, reviewed, and maintained prior to awarding
Title IV, HEA* *program funds. A University official stated that the
University makes an effort to record student information in its
electronic financial aid system. University quality control procedures
state that, on a regular basis, the financial aid director or designee
randomly selects 10 to 20 file folders to review for accuracy and
compliance. A University official informed us that, during the 2005-2006
award year, this procedure was not followed.

The 4 students for whom the University could not provide adequate
documentation of citizenship status while we were on site received
payments of \$55,503 in Title IV, HEA program funds during the 2005-2006
award year.[^1] The University subsequently located the one missing file
and was able to locate the documentation it used to make the eligibility
determinations of citizenship status for two of the other students.
However, it was not able to produce sufficient documentation for the
student with differing names on the birth record, marriage license, and
social security card, and who received \$6,168.

## Recommendations  {#recommendations .RptSubcaption}

We recommend that the Acting Chief Operating Officer (COO) for Federal
Student Aid (FSA) require the University to

1.  Return to lenders and the Department the outstanding amounts
    improperly paid to the 18 ineligible 2005-2006 award year students:

    a.  Return to lenders \$144,000 for the three students confirmed as
        U.S. citizens after our audit but who were not confirmed as
        eligible prior to the period for which they were awarded Title
        IV, HEA program funds;

    b.  Return to lenders \$20,260 not confirmed by NSLDS as canceled or
        repaid;

    c.  Return to the Department the \$5,000 Teacher Loan Forgiveness
        payment paid to the lender for a student who was not an eligible
        non-citizen; and

    d.  Return \$6,168 to the lender for the one student without
        sufficient evidence of citizenship;

2.  Review its files for the 2004-2005 and 2006-2007 award years to the
    present (during the audit, we reviewed all 2005-2006 students
    requiring secondary confirmations) to ensure that any and all
    secondary confirmations have been obtained, and, if not, determine
    the amount of improper payments and return to the lender and/or
    Department any Title IV, HEA program funds (gross amount) that were
    improperly paid to ineligible students;

3.  Continue to strengthen and follow existing policies and procedures
    to obtain and maintain adequate proof of citizenship and support for
    students' citizenship status, including secondary confirmations of
    noncitizen eligibility; and

4.  Continue to provide training to financial aid staff responsible for
    the resolution of comment codes identified during the student
    financial assistance application process.

We also recommend that the Acting COO for FSA

5.  Consider fine proceedings under 34 C.F.R. § 668.84 for the
    University's failure to perform secondary confirmations of
    noncitizen student immigration status.

**University Comments**

The University concurred, in part, and disagreed, in part, with our
finding and recommendations.

[Secondary Confirmation of Non-Citizen Student Immigration
Status]{.underline}

The University concurred that secondary confirmation of noncitizen
student immigration status with DHS was not performed prior to
disbursement for 17 students during the 2005-2006 award year. Subsequent
to the initiation of the audit, it submitted Document Verification
Request Forms (G-845s) and the required documentation to DHS for each of
the 17 students identified during the audit. From that submission, the
University obtained positive confirmation of student eligibility from
DHS for 8 students and did not obtain positive confirmation for 9
students.

-   The University provided a list of the 8 students with positive
    confirmations, the type of confirmation response, and the date
    confirmation was received by the University and asserted that a
    return of funds for those students was unwarranted.

-   The University attempted to return all Title IV, HEA program funds
    disbursed by the University for the 2004-2005 through the 2007-2008
    award years for the remaining 9 students. A total of \$307,404.98
    (net loan proceeds) was returned to the appropriate lenders. For 1
    of the 9 students, the University was unable to return loan funds
    because the loan had been repaid in full by the borrower.

The University reported corrective action taken, including the
implementation of enhanced policies and procedures, to ensure that the
secondary confirmation of citizenship/eligible non-citizenship (G-845)
is completed within 10 days as required by applicable regulations. In
addition, the University hired a Compliance Manager in September 2007 to
oversee all database match processes. University officials also stated
that all financial aid staff responsible for the resolution of CPS
comment codes have received a considerable amount of training regarding
the enhanced policies and procedures.

[Citizenship Status Documentation When SSA Match Was
Unsuccessful]{.underline}

The University stated that it obtained required proof of citizenship
before disbursing funds but misfiled the documents so they were not
available for our review. Of the 100 files reviewed, only 4 instances
were noted by the auditors where sufficient documentation of citizenship
was not present. The University submitted documentation of the
eligibility of the 4 questioned students. Also, the Financial Aid Office
created and implemented a "Name Confirmation Form" to resolve possible
name and/or date of birth discrepancies in the future.

[Recommendations to Expand the Review and Fine]{.underline}

The University asked us to revise our recommendations to address only
its failure to resolve certain CPS comments codes:

-   Only 9 of the students identified in the audit report were
    ineligible for the funds they received, and the University has
    returned those funds;

-   A broader review of files is unwarranted because the error rate "is
    well below the Department's standard compliance review threshold,"
    and

-   Because there were only isolated instances of ineligible
    disbursements and the University has returned those disbursements,
    fine proceedings are "uncalled for and excessively punitive."

Office of Inspector General (OIG) Response

We did not alter our findings that the University had awarded funds to
noncitizens without obtaining required secondary confirmations and had
not maintained (at the time of our on-site fieldwork) proof of the
citizenship status of 4 of 100 sampled students. However, we did reduce
the recommended return of funds for those students for whom the
University was able to obtain evidence of eligibility after our field
work and for funds already returned. We modified draft report
Recommendation 1.1 to show the revised amount of loan funds to return to
lenders and the Department and the number of ineligible students as
specified in the above sections. We changed draft report Recommendation
1.4 to stress that the University needs to continue to strengthen and
follow existing policies and procedures and Recommendation 1.5 to
acknowledge that the University provided training to financial aid staff
responsible for the resolution of comment codes identified during the
student financial assistance application process.

In addition to reviewing the supplemental documentation provided by the
University, we also queried NSLDS (in October 2008) to determine whether
the University canceled or otherwise paid the entire amount or a portion
of the amount awarded for the students the University agreed were never
eligible. The schedule in the University's response reflected a slightly
lower amount than the amount we calculated, because the schedule
provided the net amount returned, not the total amount awarded/canceled.
The University's lender allowed the University to cancel loans after the
loan period ended and only required a return of the net proceeds
received by the school. The University paid the net amount of the loan
proceeds for two loans which could no longer be canceled because they
had been consolidated. This resulted in recovery of less than the
original loan amounts.

[Secondary Confirmation of Non-citizen Student Immigration
Status]{.underline}

We disagree with the University's assertion that, because the University
returned funds for certain limited instances of noncompliance, the
matter is now fully resolved. Students should not have received any
Title IV, HEA program funds prior to the University's receiving
confirmation of their status as eligible non-citizens. Such confirmation
is the final step to establish the student's basic eligibility. To
protect federal funds, it is the responsibility of the University to
ensure that students are eligible before Title IV, HEA program funds are
disbursed. Furthermore, we do not agree that the supplemental
documentation the University provided was acceptable in all cases.
Finally, for those students the University concurred were ineligible,
the amounts returned did not always refund the entire amount of the
loans disbursed.

We reviewed the supplemental information provided for the 17 students in
our sample:

-   For 8 of the 17 students

    -   Five students were confirmed by DHS, after the fact, as eligible
        non-citizens, consistent with the documentation provided, and
        there was evidence that the documentation covered the loan
        periods. Without the confirmations, the University awarded and
        disbursed \$188,604 of loans during the 2005-2006 and 2006-2007
        for these individuals (one Graduate PLUS loan disbursement was
        dated during the period between submitting the confirmation form
        and receiving the reply) before their eligibility was
        established. Because the students were confirmed by DHS, we
        removed the recommended recoveries for these five students.

    -   Three students' G-845s were obtained by the University but did
        not provide evidence that the students' were eligible
        non-citizens during the period for which they received loans.
        DHS did not confirm the validity of the non-citizen
        documentation the University had submitted. The checkbox on the
        form returned by DHS indicated that the students were eligible
        on the date the form was processed (that is, they had become
        U.S. citizens), but the form did not include any certification
        sufficient to establish their eligibility during the period for
        which they received their loans. The form did not provide
        information about the students' eligibility before
        naturalization or even the dates they became citizens. According
        to NSLDS, as of October 2008, these three students had received
        \$144,000 in FFEL loans prior to the University's receiving
        confirmations that they were eligible citizens. Without
        additional documentation, we were unable to determine whether
        the students were eligible for the following loans:

  ------------- --------------- ------------------- ------------ ----------------
  **Table 1.                                                     
  Not                                                            
  Documented as                                                  
  Eligible                                                       
  Non-Citizen                                                    
  During Loan                                                    
  Periods.**                                                     

  Student       Confirmation    Loan Period         Disbursed    Total
                Date                                             

  2             11/20/2007      9/6/05 - 5/28/06    \$ 18,500    

                                6/5/06 - 2/25/07    \$ 18,500    

                                3/5/07 - 11/25/07   \$ 18,500    \$ 55,500

  3             11/20/2007      9/1/03 -- 5/31/04   \$ 17,500    

                                9/7/04 -- 5/29/05   \$ 14,000    

                                6/6/05 -- 8/28/05   \$ 2,000     \$ 33,500

  6             11/19/2007      9/6/05 -- 5/28/06   \$ 18,500    

                                6/5/06 -- 2/25/07   \$ 18,500    

                                3/5/07 -- 11/25/07  \$ 18,000    \$ 55,000

  Total                                                          \$144,000
  ------------- --------------- ------------------- ------------ ----------------

-   For 9 of the 17 students

    -   Five students' loans, totaling \$216,000, were completely
        refunded or canceled by the University.

    -   Four students still had an outstanding balance totaling
        \$25,260. (See notes 1, 2, and 3 in **Table 2** for further
        explanation.)

  --------------- ------------------------- ------------------------- ------------------------- ------------------------ ------------------------- ---------------------
  **Table 2.                                                                                                                                       
  Verification of                                                                                                                                  
  Cancellations                                                                                                                                    
  and Payments                                                                                                                                     
  Using NSLDS**                                                                                                                                    

  Student         Prior Amount Outstanding  2005-2006 Paid/Canceled   2006-2007 Paid/Canceled   2007-2008 Paid/Canceled  Total Paid/Canceled       Total Still
                                                                                                                                                   Outstanding

  1               \$ 8,500                  \$ 8,500                                                                     \$ 8,500                  \$ 0

  2               \$ 18,437 (1)                                       \$ 13,437                                          \$ 13,437                 \$ 5,000 (1)

  3               \$ 76,000                 \$ 37,000                 \$ 18,500                 \$20,500                 \$ 76,000                 \$ 0

  4               \$ 37,000                 \$ 18,500                 \$ 18,500                                          \$ 37,000                 \$ 0

  5               \$ 57,500                 \$ 18,500                 \$ 18,500                 \$20,500                 \$ 57,500                 \$ 0

  6               \$ 37,000                                           \$ 18,500                                          \$ 18,500                 \$ 18,500 (2)

  7               \$ 56,168                 \$ 30,169                 \$ 18,500                 \$ 6,834                 \$ 55,503                 \$ 665 (3)

  8               \$ 18,500                 \$ 17,405                                                                    \$ 17,405                 \$ 1,095 (3)

  9               \$ 37,000                                           \$ 18,500                 \$18,500                 \$ 37,000                 \$ 0

  Total           [\$346,105]{.underline}   [\$130,074]{.underline}   [\$124,437]{.underline}   [\$66,334]{.underline}   [\$320,845]{.underline}   [\$
                                                                                                                                                   25,260]{.underline}

  \(1\) The                                                                                                                                        
  student's                                                                                                                                        
  2006-2007 loan                                                                                                                                   
  already had                                                                                                                                      
  been reduced by                                                                                                                                  
  a \$5,000                                                                                                                                        
  Teacher Loan                                                                                                                                     
  Forgiveness                                                                                                                                      
  payment from                                                                                                                                     
  the Department                                                                                                                                   
  of Education in                                                                                                                                  
  November 2007,                                                                                                                                   
  prior to the                                                                                                                                     
  University's                                                                                                                                     
  refund as a                                                                                                                                      
  result of the                                                                                                                                    
  audit. We have                                                                                                                                   
  added the                                                                                                                                        
  amount to the                                                                                                                                    
  outstanding                                                                                                                                      
  principal                                                                                                                                        
  amount. The                                                                                                                                      
  Department                                                                                                                                       
  should be                                                                                                                                        
  reimbursed the                                                                                                                                   
  \$5,000.                                                                                                                                         

  \(2\) The                                                                                                                                        
  2005-2006 loans                                                                                                                                  
  had not been                                                                                                                                     
  canceled as                                                                                                                                      
  indicated in                                                                                                                                     
  the response.                                                                                                                                    
  Both loans,                                                                                                                                      
  totaling                                                                                                                                         
  \$18,500, were                                                                                                                                   
  still                                                                                                                                            
  outstanding                                                                                                                                      
  according to                                                                                                                                     
  NSLDS.                                                                                                                                           

  \(3\) For both                                                                                                                                   
  students 7 and                                                                                                                                   
  8, two                                                                                                                                           
  2005-2006 loans                                                                                                                                  
  totaling                                                                                                                                         
  \$18,500 were                                                                                                                                    
  consolidated.                                                                                                                                    
  However, the                                                                                                                                     
  University                                                                                                                                       
  remitted only                                                                                                                                    
  the amount                                                                                                                                       
  received by the                                                                                                                                  
  school (less                                                                                                                                     
  fees). After                                                                                                                                     
  paying down the                                                                                                                                  
  loan and                                                                                                                                         
  interest, there                                                                                                                                  
  were \$665 and                                                                                                                                   
  \$1,095 of                                                                                                                                       
  principal from                                                                                                                                   
  the original                                                                                                                                     
  loans                                                                                                                                            
  (excluding                                                                                                                                       
  capitalized                                                                                                                                      
  interest)                                                                                                                                        
  remaining,                                                                                                                                       
  respectively.                                                                                                                                    
  --------------- ------------------------- ------------------------- ------------------------- ------------------------ ------------------------- ---------------------

[Citizen Status Documentation When SSA Match Was
Unsuccessful]{.underline}

Although not provided during the course of our audit, we accepted the
supplemental documentation provided for three of the four students in
the original sample. However, the documentation provided for one of the
two students with questions about marital status and name change still
was insufficient to establish eligibility. The University provided a
narrative to explain the name change, but the document was not signed or
dated. Furthermore, additional documents submitted did not support the
student's name as it appears on the birth certificate. The total amount
that remains unsupported is \$6,168.

[Recommendations for Enhanced Policies and Procedures]{.underline}

We neither reviewed nor confirmed the University's assertions that
corrective action, including the implementation of enhanced policies and
procedures, the hiring of a Compliance Manager in September 2007, and
the training provided to all financial aid staff responsible for the
resolution of CPS comment codes, has been taken. However, we have
modified our report to recommend "continued" implementation of those
actions.

[Recommendations to Expand the Review and Fine]{.underline}

Because the University was able to resolve the majority of the cases (99
of 100) involving citizenship documentation, we removed draft report
Recommendation 1.3, in which we recommended that the University review
its files for citizens failing the SSA match for the 2004-2005 and
2006-2007 award years. This resulted in a renumbering of the remaining
recommendations.

The University's comments did not demonstrate that its practices in
other years were any different than they were during our audit period.
The University failed to conduct required secondary confirmations for
100 percent (17 of 17) of the students to whom it awarded Title IV, HEA
program funds during 2005-2006 award year, and we have no evidence
showing that it performed secondary confirmations for students in other
years. Therefore, we continue to recommend that FSA require the
University to review its files for the 2004-2005 and 2006-2007 award
years to the present to ensure that all required secondary confirmations
have been obtained. We also continue to recommend that FSA consider fine
proceedings. The University's non-compliance with the requirements
resulted in the University concurring that more than half the students
(9 of 17) received Title IV, HEA program funds to which they were not
entitled. We were not able to accept after-the-fact confirmations for
another 3 students (a total of 12 ineligible students).

FINDING NO. 2 -- The University Did Not Adequately Resolve Comment Codes
after a Match with NSLDS Indicated That Students Were Approaching or Had
Exceeded Aggregate Loan Limits

The University did not adequately resolve all comment codes related to
aggregate loan limits, and, as a result, awarded or disbursed \$448,759
of FFEL and \$2,502 of FWS program funds to students who had exceeded
their aggregate subsidized loan limit and/or aggregate total (subsidized
and unsubsidized) loan limit.[^2]

The University did not properly consider loan balances included on
students' ISIRs or resolve ISIR comment codes that indicated the
students were approaching or had exceeded aggregate loan limits. CPS
performs a database match with NSLDS to obtain an estimate of the
student's outstanding principle balances of subsidized and total
(subsidized and unsubsidized) loans for each application. That
information is provided on a financial aid history report with the ISIR
to assist the institution in determining a student's remaining
eligibility under the loan limits. NSLDS also monitors loan limits and
generates a new ISIR and financial aid history report, including new or
repeated comment codes about whether loan limits are close or have been
exceeded, if subsequent loans are posted with scheduled disbursements
which will cause the student to approach or exceed the aggregate loan
limits.

Using NSLDS loan histories, we identified 200 students (of the 531
students at the University with comment codes on at least one 2005-2006
ISIR that indicated they were close to and/or had exceeded their loan
limits) whose loan histories indicated they may have received loans in
excess of the limits. Next, we judgmentally selected the 75 students
with the largest amounts in excess of loan limits. We then determined
(1) whether any of the 75 students' loans had been paid off or
discharged and (2) whether the University should have been able to
determine that a student's loan limits were exceeded before disbursing
additional loan funds to the student.

Our analysis determined that the University disbursed loans for 40 of
the 75 students when it should have been able to determine that the
students had already exceeded their aggregate loan limits. We did not
include overawards if the NSLDS Financial Aid History provided with the
latest ISIR the school had received before disbursement (1) did not
include loans awarded by another institution, (2) indicated remaining
eligibility if the unallocated balance of consolidated loans was
excluded, or (3) the NSLDS had made an error and understated the total
loan balance even though a review of the underlying loans would have
yielded a larger outstanding loan balance.

An institution must identify and resolve discrepancies in the
information it receives with respect to a student's application for
Title IV, HEA program funds (34 C.F.R. § 668.16(f)). Also, in accordance
with 34 C.F.R. § 682.603(d)(1), "A school may not certify a Stafford or
PLUS loan application, or combination of loan applications, for a loan
amount that . . . \[t\]he school has reason to know would result in the
borrower exceeding the annual or maximum loan amounts in § 682.204 . . .
."

Pursuant to 34 C.F.R. § 668.32(g)(2), "A student is eligible to receive
title IV, HEA program assistance if the student . . . \[h\]as not
obtained loan amounts that exceed annual or aggregate loan limits made
under any title IV, HEA loan program . . . ."

Pursuant to 34 C.F.R. § 668.35(d)---

> A student who is not in default on a loan made under a title IV, HEA
> loan program, but has inadvertently obtained loan funds under a title
> IV, HEA loan program in an amount that exceeds the annual or aggregate
> loan limits under that program, may nevertheless be eligible to
> receive title IV, HEA program assistance if the student---
>
> \(1\) Repays in full the excess loan amount; or
>
> \(2\) Makes arrangements, satisfactory to the holder of the loan, to
> repay that excess loan amount.

The *2005-2006 Federal Student Aid Handbook* states that the institution
is "responsible for knowing the student's prior Title IV loans before
disbursing additional loan funds to the student." (*2005-2006 Federal
Student Aid Handbook*, pages 5-7)

The University's financial aid staff made notes in electronic comment
files for 17 (of the 40) students, indicating that those students were
approaching or had exceeded aggregate loan limits. Despite these notes,
the University disbursed additional FFEL funds to the students,
resulting in overawards. In some cases, the outstanding loan balances
reported on the ISIR clearly showed that students were at or over the
loan limits, but the University certified additional loans. For at least
2 of those students, comments in the file indicated that balances for
the students' consolidation loans should be subtracted from the ISIR
totals; however, when we reviewed the consolidation loans' underlying
loan balances, we determined that the amount on the ISIR was correct.
For other students, files did not identify the reason that the
University did not use the outstanding balances on the ISIR.

The University's staff did not update the total subsidized and
unsubsidized loan balances reported on the ISIR with all loans disbursed
by the University after the ISIR was generated. The circumstances at the
University make this kind of update essential. Students often complete
the academic requirements for one loan year in approximately nine months
and are then awarded a second loan from the same ISIR. The student's
third loan, awarded from the next year's ISIR, may be disbursed as late
as December or January, in the following award year. If the University
obtained the student's second ISIR before the second loan was disbursed,
the University's electronic financial aid system would only use the
outdated information from that ISIR to determine loan limit eligibility.
It would not consider any subsequent awards and disbursements made by
the University.

For some students, the University acknowledged the comment code
indicating that the student had exceeded Stafford subsidized loan limits
by canceling subsequent disbursements of the subsidized loan. However,
34 C.F.R. § 668.35(d) provides that a student who has borrowed more than
the annual or aggregate Stafford loan limits cannot be awarded any
additional Title IV, HEA program funds until arrangements are made to
repay the overaward. Even though there was no indication the student had
made arrangements to repay the overaward, the University reclassified
scheduled subsidized disbursements to unsubsidized loans, continued to
make new unsubsidized loan awards, and, in some cases, awarded other
Title IV, HEA program funds to the student.

As a result of not adequately resolving comment codes related to loan
limits, the University awarded or disbursed Title IV, HEA program funds
for students who had exceeded their aggregate subsidized loan limit
and/or aggregate total (subsidized and unsubsidized) loan limit.

The University improperly disbursed \$448,759 in FFEL Program funds to
the 40 students who were identified by 2005-2006 CPS comment codes as
approaching or exceeding aggregate loan limits. One student was
improperly disbursed FWS funds in the amount of \$2,502. The chart below
shows the amount of FFEL and FWS program funds improperly disbursed
during the 2005-2006, 2006-2007, and 2007-2008 award years.

  -------------------------- ------------- ----------- ----------- -----------
  **Table 3. Improper FFEL                                         
  and FWS Program Funds                                            
  Disbursed**                                                      

                             2005-2006     2006-2007   2007-2008   Total

  Stafford Subsidized Loans  \$ 77,728     \$ 47,005   \$ 4,236    \$128,969

  Stafford Unsubsidized      \$175,656     \$ 97,275   \$16,342    \$289,273
  Loans                                                            

  Stafford Graduate PLUS     \$0           \$ 30, 517  \$0         \$ 30,517

  Total FFEL                 \$253,384     \$174,797   \$20,578    \$448,759

  Federal Work Study Funds   \$ 2,502      \$0         \$0         \$ 2,502
  -------------------------- ------------- ----------- ----------- -----------

Improperly disbursed subsidized loans might have caused the Department
to make improper special allowance payments or payments for other
benefits and increased the Department's potential liability for default
claims. One student already has defaulted on the loans and another
student's loans were discharged through bankruptcy.

After we informed University officials of the overawards but before we
issued this final report, the University canceled, refunded, or made
payments on loans totaling \$173,245 included above. In addition, the
University reclassified \$73,514 of subsidized loan disbursements as
unsubsidized loan disbursements. The reclassification effectively
restored students' eligibility for \$104,385 of previously improper
unsubsidized loan disbursements and the \$2,502 FWS award. The removal
of the subsidized overaward retroactively restored the students'
eligibility because the students' loans no longer exceeded the total
aggregate loan limit. If the lender allowed retroactive reclassification
or cancellation of the disbursements that exceeded the subsidized loan
limits (with an effective date the same as the original disbursement),
the student's loan history no longer showed any period of overaward or
ineligibility. Therefore, the previously improper disbursements of
subsidized loans and other Title IV, HEA assistance between the date of
original overaward and the retroactive reclassification or cancellation
were now proper. The remaining improper disbursements total \$97,615, as
detailed in Table 4.

  --------------------------- ----------- ----------- ----------- ----------
  **Table 4. FFEL and FWS                                         
  Program Funds Outstanding                                       
  After Recoveries**                                              

                              2005-2006   2006-2007   2007-2008   Total

  Stafford Subsidized Loans   \$ 9,494    \$ 4,961    \$ 1,402    \$15,857

  Stafford Unsubsidized Loans \$50,326    \$ 29,569   \$1,863     \$81,758

  Stafford Graduate PLUS      \$0         \$ 0        \$0         \$ 0

  Total FFEL                  \$59,820    \$34,530    \$3,265     \$97,615

  Federal Work Study Funds    \$ 0        \$0         \$0         \$ 0
  --------------------------- ----------- ----------- ----------- ----------

**Recommendations**

We recommend that the Acting COO for FSA require the University to

1.  Return to lenders \$97,615 of FFEL program funds improperly paid to
    15 students in excess of loan limits;

2.  Continue to strengthen and follow existing policies and procedures
    to resolve comment codes related to a student's aggregate loan
    limits;

3.  Continue to provide training to financial aid staff responsible for
    the resolution of comment codes identified during the student
    financial assistance application process, to ensure that the
    resolution of comment codes, including comment codes on aggregate
    loan limits, is accurate, adequate, and documented; and

4.  Review its files for the 2004-2005 award year to the present
    (excluding the 75 students we reviewed) to identify other borrowers
    who received loan amounts in excess of their aggregate limits and
    return to lenders any FFEL Program funds delivered to ineligible
    borrowers or paid in excess of loan limits.

We also recommend the Acting COO for FSA

5.  Consider fine proceedings under 34 C.F.R. § 668.84 for the
    University's delivery of loan funds to borrowers in excess of
    aggregate limits.

##  {#section .RptSubcaption}

## University Comments {#university-comments .RptSubcaption}

##  {#section-1 .RptSubcaption}

The University agreed, in part, with our finding and recommendations but
disagreed with most of the questioned disbursements. Additional
documentation and a detailed discussion were provided on a
student-by-student basis. The University also listed circumstances
pertaining to ISIR and NSLDS processing during the 2005-2006 award year
that it felt should have been considered when reviewing comment code
resolution related to aggregate loan limits. The University enumerated
that (1) prior to March 2005, historical Outstanding Principal Balance
and Outstanding Interest Balance amounts were not available through
NSLDS; (2) NSLDS Newsletter No. 11 (February 2006) instructed financial
aid administrators to change the methodology for calculating aggregate
loan totals to eliminate "unallocated amounts when calculating aggregate
subsidized, unsubsidized, and combined outstanding principal balances;"
(3) it "relied heavily on ISIRs in reconstructing loan histories for
students at issue in this audit" due to the dynamic nature of the NSLDS
website; and (4) the Department identified, on October 20, 2006, an
NSLDS post-screening system error that affected aid overpayment and
ISIRs during the summer of 2006.

The University divided the 40 students that we determined to have
exceeded aggregate loan limits into three groups.

-   Group 1 -- For 15 students, the University disputed the draft audit
    report's conclusions in their entirety. It asserted that the
    students were eligible at the time of their 2005-2006 disbursement
    and/or that a post-screened ISIR arrived after the 2005-2006 awards
    had been fully or partially disbursed.

-   Group 2 -- For 16 students, the University concurred that it did not
    adequately resolve 2005-2006 aggregate loan limits. It determined
    that each of the students had exceeded their loan limits. However,
    it disputed the specific amount of Title IV, HEA program funds
    needing to be returned to lenders. The disputed amounts were
    primarily disbursements for 2006-2007 and 2007-2008.

-   Group 3 -- For 9 students, the University concurred and returned the
    pertinent 2005-2006 award year Title IV, HEA program loan funds to
    the appropriate lenders.

The University disagreed that it improperly disbursed \$2,502 in FWS
program funds to one student, stating that its recent return of the loan
funds made the student eligible for the FWS disbursement.

[Comments on Recommendations]{.underline}

The University also provided comments regarding draft audit report
Recommendations 2.2 through 2.5. The University disagreed that any other
2005-2006 awards were inappropriate based on information that was
available at the time of the 2005-2006 disbursements. Therefore, the
University asserted that no further returns of funds are required with
respect to the 2005-2006 award year. The University further stated that
additional supporting documentation was provided, and it has returned
all Title IV, HEA program funds that it determined were overpayments for
the 2005-2006 award year.

The University asserted that, in the years following the period covered
by the audit, it has revised and strengthened its policies and
procedures for reviewing and resolving CPS comment codes. In August
2007, the University provided training to all staff on its revised
procedure for documenting NSLDS values when reviewing aggregate totals
directly from the NSLDS website. In January 2008, its financial aid
awarding team was restructured to include a new manager and additional
staff. At the same time, the University strengthened its NSLDS review
and coding for students who receive "renewal loans" (two loan years from
one ISIR), and financial aid staff received special training to review
NSLDS for renewal students. Most recently, in March 2008, the University
adopted significant changes to the coding and quality control features
of the PowerFAIDS software and trained all staff responsible for
resolving comment codes. The software was designed to prevent manual
errors pertaining to NSLDS and to correct errors before funds are
disbursed.

The University disagreed with the draft audit report's recommendation
that FSA require a broader review of files from the 2004-2005 award year
to the present. The University asserted that, because the OIG reached
incorrect conclusions regarding students' eligibility for loan
disbursements during the 2005-2006 award year, and because the
Department has acknowledged weaknesses and problems with NSLDS during
that award year, a broader file review is excessive and unwarranted. The
University claimed to have (1) examined all of the students questioned
by the audit, (2) returned appropriate funds to lenders, and (3)
previously implemented enhanced policies and procedures to prevent
future similar occurrences. Therefore, the University considered fine
proceedings regarding this matter both uncalled for and excessively
punitive.

## OIG Response {#oig-response .RptSubcaption}

We did not change the finding other than by adjusting the report to
reflect actions taken by the University subsequent to our audit and by
making a net adjustment of \$3,411[^3] to the amount originally
questioned. Though the University's subsequent actions restored some
students' eligibility for certain disbursements, its failure to properly
determine students' eligibility at the time disbursements were made put
Title IV, HEA program funds at risk and delivered Title IV, HEA program
funds to students who were, and remain, ineligible.

During our audit, we only used information that was available to the
University at the time it made the disbursements. We fully considered
the circumstances pertaining to ISIRs and NSLDS processing regarding
loan limits during 2005-2006 and the discontinuation of the requirement
to review unallocated loan amounts in January 2006. The methodology we
used, described in the bullets below, was simplified to provide a
conservative method to identify loans made to ineligible students. Some
of the loans that our audit did not identify as being made to ineligible
students might be improper if additional information were obtained.

-   Our original analysis did not include any unallocated amounts
    reported on an ISIR, even before January 2006, in calculating and
    determining if a student exceeded his/her loan limit.

-   In addition to reviewing NSLDS loan histories, we reviewed data,
    including ISIRs, notes, and comments to electronic student files
    made by University staff, provided by the University to determine
    what was known in determining the amount of program funds improperly
    paid to ineligible students in excess of loan limits. We used only
    the aggregate balances of subsidized and unsubsidized loans
    calculated on the ISIR in the University's files and subsequent
    disbursements the University made.

-   We did not calculate an overaward if an ISIR were incomplete or in
    error. For four sampled students, we did not question the overaward
    that occurred because the NSLDS balances were understated, even
    though an examination of all the loans on NSLDS showed that they
    should have been included. For another sampled student, we reduced
    the amount for which we held the University responsible by the
    amount of loans omitted from the NSLDS total.

-   If overawards were caused by the University's unknowingly relying on
    an understated ISIR aggregate loan balance, we did not question
    disbursements made prior to receiving the corrected ISIR. We held
    the University responsible only for disbursements after the later
    ISIR date.

-   We reduced any overaward calculation based on any corrections made
    on the NSLDS loan history subsequent to the awards that reduced the
    amount of aggregate loan balances at the time of disbursement. Any
    uncertainties were resolved in favor of the University.

None of the documentation provided with the University's comments caused
us to change our determination. We also do not agree that only
disbursements in excess of the aggregate loan limits during the
2005-2006 award year were improper. The requirement to monitor the
students' aggregate loan limits continued during the 2006-2007 and
2007-2008 award years. If a student exceeded the aggregate loan limits
during 2005-2006, the student remained ineligible for disbursements of
Title IV, HEA program funds in subsequent years. In addition, when
determining whether a student exceeded loan limits, the University was
responsible for including the amounts of the subsequent disbursements
that it made itself, even if the student's ISIR did not yet include
those loans. The notes made by its financial aid staff for the students
should have resulted in extra care being taken by the University when
aid for those students was packaged and disbursed. At the time the
University made the loan disbursements, all 40 students were ineligible
to receive Title IV, HEA program disbursements due to exceeding
aggregate loan limits.

Attachment 2 to this report includes a table that shows the remaining
questioned costs for each of the three groups. We determined that the
University's refunds, cancellations, and reclassifications, made after
our audit, cleared all questioned costs for 25 of the 40 students who
had received improper disbursements. The University's actions also
reduced the questioned costs for some of the remaining 15 students. We
calculated the remaining questioned costs for the 15 students to be
\$97,615.[^4]

In its response, the University divided the 40 students into three
groups:

-   [Group 1 - The University Did Not Concur]{.underline}. We reviewed
    the University's response, along with the additional documentation,
    and disagree with the University for all 15 students. The University
    made disbursements totaling \$117,510 to these students when their
    borrowing exceeded their aggregate loan limits. We agree that, in
    many instances, the disbursements were proper during the 2005-2006
    award year. However, improper disbursements were made during the
    2006-2007 and 2007-2008 award years. Regardless of its
    non-concurrence, NSLDS records reflect that the University has
    refunded or cancelled \$55,777 of the loans for Group 1. The amount
    that remains in question is \$44,109. (See Attachment 2, Group 1)

-   [Group 2 - The University Concurred but Disputed the Amount
    Calculated]{.underline}. We analyzed the University's response,
    along with the additional documentation submitted by the University.
    We disagreed with the University's exclusion of disbursements made
    during the 2006-2007 and 2007-2008 award years, because the 16
    students were ineligible during those years and their excess
    borrowing was not resolved before we performed our audit work. The
    University refunded, canceled, or reallocated loans for these
    students, including amounts with which the University did not agree,
    totaling \$102,227. An additional, \$99,407 in improper
    disbursements was resolved when eligibility was retroactively
    restored by cancellations or reclassifications. The amount that
    remains in question is \$43,724. (See Attachment 2, Group 2)

-   [Group 3 - The University Concurred]{.underline}. We reviewed the
    University's response and documentation it provided for its
    subsequent actions. We accepted the support for 7 of the 9 students.
    For the remaining 2 students, the University stated that it had made
    a check request for the net amount, but it did not provide support
    that the funds were returned to the lender. As of October 2008,
    NSLDS records for the 2 students did not reflect that Title IV, HEA
    program funds had been returned. Therefore, we do not agree with the
    amount of Title IV, HEA program loan funds that were returned. The
    amount that remains in question is \$9,782. (See Attachment 2, Group
    3)

[FWS]{.underline}

We agree that the \$2,502 of FWS disbursed to one student is no longer
in question. At the time FWS funds were disbursed, the student was
ineligible. However, the University has since returned and canceled
subsidized and unsubsidized loan funds, thereby eliminating the
overaward of loan funds and making the FWS disbursement proper.

[Comments on Recommendations]{.underline}

We modified Recommendation 2.1 to show the revised amount of loan funds
to return to lenders and the number of students who received an improper
payment. We revised Recommendation 2.2 to stress that the University
needs to continue to strengthen and follow existing policies and
procedures. We revised Recommendation 2.3 to acknowledge the
University's assertion that it provided training to staff to ensure that
the resolution of comment codes is accurate, adequate, and documented.
However, we do not agree with the University's assertion that further
return of funds are not required or that additional file reviews are
unwarranted and excessive.

We did not remove our recommendation that the Department consider fine
proceedings under 34 C.F.R. § 668.84 for the University's delivery of
loan funds to borrowers in excess of aggregate limits. The additional
documentation provided by the University did not cause us to revise our
analysis of the initial overawards. Fifty-three percent (40 of 75) of
the students we reviewed received a loan that exceeded their aggregate
loan limit.

OBJECTIVE, SCOPE, AND METHODOLOGY

The objective of our audit was to determine if the University resolved
comment codes in compliance with regulations and Department guidance.
Our audit covered the 2005-2006 award year.

To accomplish our objective, we

1.  Reviewed selected provisions of the HEA, regulations, and FSA
    guidance applicable to the audit objective.

2.  Reviewed (a) *Walden University's* *Compliance Attestation
    Examination of the Title IV Student Financial Assistance Programs
    For The Year Ending December 31, 2004;*

> \(b\) *Walden E-Learning, Inc. (A Subsidiary of Laureate Education,
> Inc.) Consolidated Financial Statements for the year ended December
> 31, 2004 with Report of Independent Auditors*; (c) *Compliance
> Attestation Examination of the Title IV Student Financial Assistance
> Programs For The Year Ending December 31, 2005;* (d) *Walden
> E-Learning, Inc. (A Wholly Owned Subsidiary of Laureate Education,
> Inc.) Consolidated Financial Statements and Supplementary Information
> for the year ended December 31, 2005 with Report of Independent
> Auditors*; (e) *Compliance Attestation Examination of the Title IV
> Student Financial Assistance Programs For The Year Ending December 31,
> 2006;* and (f) *Walden E-Learning, Inc. (A Wholly Owned Subsidiary of
> Laureate Education, Inc.) Consolidated Financial Statements and
> Supplementary Information for the year ended December 31, 2006
> with Report of Independent Auditors.*

3.  Reviewed reports prepared by FSA and the Higher Learning Commission.

4.  Reviewed the University's program participation agreement.

5.  Reviewed written policies and procedures and interviewed University
    officials to gain an understanding of the University's internal
    control structure, policies, procedures, and practices applicable to
    resolving comment codes returned during student financial assistance
    application processing.

6.  Reviewed the University's web site, organizational chart, and
    financial aid staff directory to gain an understanding of the
    University's history and organization.

7.  Reviewed the records of 30 students randomly selected from a
    universe of 2,712 students who received Title IV, HEA program funds
    and whose 2005-2006 SAR/ISIR contained a comment code returned
    during the student financial assistance application process.[^5]

8.  Queried the universe of 2,708 students[^6] to identify students who
    received Title IV, HEA program funds and whose final 2005-2006 CPS
    record contained a citizenship status comment code returned during
    the student financial assistance application process. The query
    identified 412 students with a comment code specific to citizenship
    status. We stratified the 412 students into three populations. The
    first population contained 18 students for whom the University was
    required to confirm citizenship status.[^7] We reviewed all 18
    students' records. The second population contained 2 students who
    had multiple citizenship comment codes, requiring the University to
    obtain proof of citizenship. We reviewed the records for both
    students. The third population consisted of 392 students who had a
    single citizenship comment code, requiring the University to obtain
    proof of citizenship. We randomly selected 100 of the 392 students
    and reviewed 99 student files (the University was unable to locate 1
    student file).

9.  Queried the universe of 2,708 students to identify students who
    received Title IV, HEA program funds and whose SAR/ISIR contained an
    aggregate loan limits comment code. The query identified 531
    students with a comment code specific to aggregate loan limit. We
    judgmentally selected and reviewed the records for 75 (of 531)
    students who were awarded the largest amounts in excess of loan
    limits.

10. Reviewed additional documentation provided by the University in
    response to the findings presented in the draft report to determine
    whether the additional documentation was sufficient to reduce the
    instances of noncompliance for each of the findings.

We relied, in part, on data provided to us by University officials. We
compared the University's data to data we obtained from CPS and NSLDS to
ensure we had a complete universe from which to select our samples for
reviewing student records and determining the University's compliance
with regulations and Department guidance. University officials provided
us a listing that identified 2,708 students who received Title IV, HEA
program funds during the 2005-2006 award year and whose 2005-2006
SAR/ISIR contained a comment code. To ensure completeness and accuracy
of the University data, we reviewed the query the University used to
extract the names of students who received Title IV, HEA program funds
during the 2005-2006 award year and whose 2005-2006 SAR/ISIR contained
comment codes. We also confirmed the reasonableness and completeness of
disbursement and ISIR data in the University's electronic system during
our review of sample items. Based on our comparisons and reviews, we
concluded the data the University provided to us were sufficiently
reliable for our purposes.

We conducted our audit from July through December 2007 at the
University's office in Baltimore, Maryland, and at our offices. We
discussed the results of our audit with University officials on December
12, 2007 and on May 21, 2008. We performed our work in accordance with
generally accepted government auditing standards (2003 Revision)
appropriate to the scope of our audit.

ADMINISTRATIVE MATTERS

Statements that managerial practices need improvements, as well as other
conclusions and recommendations in this report, represent the opinions
of the Office of Inspector General. Determinations of corrective action
to be taken, including the recovery of funds, will be made by the
appropriate Department of Education officials.

If you have any additional comments or information that you believe may
have a bearing on the resolution of this audit, you should send them
directly to the following Department of Education official, who will
consider them before taking final Departmental action on this audit:

> James Manning
>
> Acting Chief Operating Officer
>
> Federal Student Aid
>
> U. S. Department of Education
>
> Union Center Plaza, Room 112E1
>
> 830 First Street, N. E.
>
> Washington, D.C. 20202

It is the policy of the U. S. Department of Education to expedite the
resolution of audits by initiating timely action on the findings and
recommendations contained therein. Therefore, receipt of your comments
within 30 days would be appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. § 552),
reports issued by the Office of Inspector General are available to
members of the press and general public to the extent information
contained therein is not subject to exemptions in the Act.

> Sincerely,
>
> /s/
>
> Gary D. Whitman
>
> Regional Inspector General
>
> for Audit

Attachments

ATTACHMENT 1: University Comments on the Draft Audit Report

(The University provided several attachments with its letter. All
personally identifiable information mentioned in the University's
comments was replaced with bracketed text. Because of the voluminous
nature of the attachments to the University's comments and the
personally identifiable information within, we have not included them in
Attachment 1. Copies of the attachments to the University's comments,
less the personally identifiable information, are available on request.)

**[Via E-Mail (PDF) and Overnight Delivery]{.underline}**

July 11, 2008

Mr. Gary D. Whitman

Regional Inspector General for Audit

Office of the Inspector General

U.S. Department of Education

500 West Madison Street, Suite 1414

Chicago, IL 60661

**Re: Response and Comments to Draft Audit Report**

**(Control Number ED-OIG/A05H0018)**

Dear Mr. Whitman:

The materials accompanying this letter comprise Walden University's
response and comments to the June 2, 2008 Draft Audit Report entitled
*Walden University's Compliance with Selected Regulations and U.S.
Department of Education Guidance*. In order to meet the accessibility
requirements of Section 508 of the Rehabilitation Act of 1973, as
amended, we have also enclosed a CD-ROM containing the narrative portion
of this response in electronic (Microsoft Word) format.

As described in the attached comments, Walden University concurs in part
and disagrees in part with the Findings and Recommendations set forth in
the Draft Audit Report. We appreciate the opportunity to comment on the
Draft Audit Report, and we reserve the right and opportunity to respond
further to any final report as may be issued.

Respectfully submitted,

/s/

Jonathan A. Kaplan, J.D.

President

**FINDING NO. 1** -- **The University Did Not Resolve All Comment Codes
Generated after**

**Unsuccessful Database Matches with Other Federal Agencies**

The Draft Audit Report alleges that Walden University ("Walden" or "the
University") did not always resolve comment codes generated (1) when
students claiming to be eligible noncitizens failed the CPS match with
the Department of Homeland Security ("DHS") or (2) when students
claiming to be citizens failed the match with the Social Security
Administration ("SSA"). As a result of these findings, with which Walden
concurs in part and disagrees in part, the Draft Audit Report claims
that the University improperly disbursed \$313,273 in Title IV, HEA
funds to ineligible students. As described in more detail below,
however, and supported by enclosed documentation, the University is able
to demonstrate that a significant majority of the questioned students
were in fact eligible to receive Title IV, HEA funds. As a result,
Walden respectfully asserts that its return of funds for certain limited
instances of noncompliance should fully resolve this matter, that no
further file review is necessary, and that a fine proceeding would be
excessively punitive.

**Secondary Confirmation of Non-citizen Student Immigration Status When
CPS Match with DHS Was Unsuccessful**

The University concurs with the Draft Audit Report's finding that
secondary confirmation of non-citizen student immigration status with
DHS was not performed in a timely fashion for 17 students during the
2005-06 award year. Subsequent to the initiation of the audit, Walden
submitted Document Verification Request Forms G-845s and the required
proof of citizenship documentation to DHS for each of the 17 students
identified during the audit. The following eight students were
consequently determined to be eligible for Title IV, HEA funds (see
Appendix A for supporting documentation):

  ---------- ----------- ------------- ---------- ------------ ----------------------- -----------
  \***Last   \***First   **Gross       **G-845    **G-845      **Comments**            **G-845
  Name**     Name**      Amount        Sent**     Received**                           Result**
                         Disbursed**                                                   

                         \$ 16,252.82  10.26.07   12.12.07     Received G-845 from DHS Eligible
                                                               12.12.07. USCIS         for federal
                                                               response is #4 Asylee.  financial
                                                                                       aid

                         \$ 48,779.00  10.26.07   11.20.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #10 U.S.    financial
                                                               Citizen.                aid

                         \$ 15,449.00  10.26.07   11.20.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #10 U.S.    financial
                                                               Citizen.                aid

                         \$ 15,975.38  10.26.07   11.16.07     Received G-845 from DHS Eligible
                                                               11.16.07. USCIS         for federal
                                                               response is #1 Lawful   financial
                                                               Permanent Resident.     aid

                         \$ 33,920.38  10.26.07   11.20.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #1 Lawful   financial
                                                               Permanent Resident.     aid

                         \$ 53,905.00  10.26.07   11.19.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #10 U.S.    financial
                                                               Citizen.                aid

                         \$ 17,945.00  10.26.07   11.20.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #2          financial
                                                               Conditional Resident.   aid

                         \$ 16,497.76  10.26.07   11.20.07     Received G-845 from DHS Eligible
                                                               11.20.07. USCIS         for federal
                                                               response is #1 Lawful   financial
                                                               Permanent Resident.     aid
  ---------- ----------- ------------- ---------- ------------ ----------------------- -----------

\* \[Student Name Deleted\]

As each of the above students was in fact eligible to receive Title IV,
HEA funds, a return of funds is not warranted notwithstanding the fact
that secondary confirmation did not occur prior to disbursement.
Requiring a return of funds to lenders for these students, based solely
on a documentation error rather than the student's actual eligibility to
receive such funds, would be an unjustified and unsupportable result.
Walden therefore disagrees with the Draft Audit Report's recommendation
that funds be returned with respect to the above eight students.

With respect to the remaining nine students, the University has reviewed
the files and determined that secondary confirmation of citizenship was
not obtained from DHS during the 2004-05, 2005-06, 2006-07 or 2007-08
award years. We thus concur with the Draft Audit Report's recommendation
that loan proceeds for these students be returned to appropriate
lenders, and we have processed such returns in a total amount of
\$307,404.98 as set forth below (see supporting documentation in
Appendix B):

+-------+-------+--------+----------+---------+--------+----------+
| \**   | \***  | **Net  | **Net    | **Net   | **Net  | **Net    |
| *Last | First | loan   | loan**   | loan**  | loan   | loan**   |
| N     | N     | amount |          |         | am     |          |
| ame** | ame** | retur  | **       | **a     | ount** | **       |
|       |       | ned:** | amount** | mount** |        | amount** |
|       |       |        |          |         | *      |          |
|       |       | **200  | **ret    | **retu  | *retur | **ret    |
|       |       | 4-05** | urned:** | rned:** | ned:** | urned:** |
|       |       |        |          |         |        |          |
|       |       |        | **2      | **20    | **200  | **all    |
|       |       |        | 005-06** | 06-07** | 7-08** | years**  |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$ -    |        | \$       |
|       |       |        | 8,245.00 |         |        | 8,245.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$ 0     | \$      |        | \$       |
|       |       |        | [^8]     | 18      |        | 1        |
|       |       |        |          | ,300.00 |        | 8,300.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      | \$     | \$       |
|       |       |        | 3        | 18      | 6,     | 6        |
|       |       |        | 5,890.00 | ,500.00 | 834.00 | 1,224.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      |        | \$       |
|       |       |        | 1        | 18      |        | 3        |
|       |       |        | 7,945.00 | ,500.00 |        | 6,445.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      | \$     | \$       |
|       |       |        | 1        | 18      | 6,     | 4        |
|       |       |        | 7,945.00 | ,500.00 | 834.00 | 3,279.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      |        | \$       |
|       |       |        | 1        | 18      |        | 3        |
|       |       |        | 7,945.00 | ,500.00 |        | 6,445.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      | \$     | \$       |
|       |       |        | 2        | 18      | 6,     | 5        |
|       |       |        | 9,908.98 | ,500.00 | 834.00 | 5,242.98 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$ -    |        | \$       |
|       |       |        | 1        |         |        | 1        |
|       |       |        | 7,945.00 |         |        | 7,945.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | \$ -   | \$       | \$      |        | \$       |
|       |       |        | 1        | 12      |        | 3        |
|       |       |        | 7,945.00 | ,334.00 |        | 0,279.00 |
+-------+-------+--------+----------+---------+--------+----------+
|       |       | **\$   | **\$     | **\$    | **\$   | **\$     |
| **TOT |       | -**    | 163,     | 123,1   | 20,50  | 307,     |
| ALS** |       |        | 768.     | 34.00** | 2.00** | 404.98** |
|       |       |        | 98**     |         |        |          |
+-------+-------+--------+----------+---------+--------+----------+

\* \[Student Name Deleted\]

Walden University has taken corrective action, including the
implementation of enhanced policies and procedures, to ensure that the
secondary confirmation of citizenship/eligible non-citizenship (G-845)
is completed within 10 days as required by applicable regulations (see
Appendix C). In September 2007, Walden University created and filled a
Compliance Manager position to oversee all database match processes. We
have further provided considerable training regarding these enhanced
policies and procedures to all financial aid staff members responsible
for the resolution of CPS comment codes.

**Documentation of Student Citizenship Status When CPS with SSA Was
Unsuccessful**

Walden disputes this portion of the Draft Audit Report finding, in its
entirety, as we have been and remain in material compliance with the
requirements of 34 C.F.R. § 668.24(a)(3) pertaining to U.S. citizenship
documentation prior to the awarding of Title IV, HEA funds. As noted in
the Draft Audit Report, the OIG field auditors noted only four instances
-- out of one-hundred files reviewed -- where sufficient documentation
of citizenship was not present. The University has since adequately
documented the eligibility of the four questioned students (see
supporting documentation at Appendix D):

> [\[Student Name Deleted\]]{.underline} -- Although the student's file
> could not be located at the time of the audit, both the file and
> citizenship documentation have since been located. According to
> PowerFAIDS system records, the information for this student was
> received on 7/23/2004.
>
> [\[Student Name Deleted\]]{.underline} -- The citizenship
> documentation had been originally misfiled and was not in the correct
> student folder at the time of the audit. It has since been located.
> According to PowerFAIDs system records the information for this
> student was received on 10/20/05.
>
> [\[Student Name Deleted\]]{.underline} -- The University had
> previously obtained documentation of citizenship, but the student's
> records were unclear due to a change in marital status and name. Such
> name discrepancies and records have subsequently been clarified.
>
> [\[Student Name Deleted\]]{.underline} -- The University had
> previously obtained documentation of citizenship, but the student's
> records were unclear due to a change in marital status and name. Such
> name discrepancies and records have subsequently been clarified.

The University has thus demonstrated that 100 percent of the student
files contained in the audit sample contain adequate documentation of
citizenship. Consequently, the Draft Audit Report's statement that
\$55,503 in Title IV, HEA funds were improperly disbursed to the above
students is incorrect. Additionally, based on some of the issues
identified in the audit, the Financial Aid Office has created and
implemented a "Name Confirmation Form" to resolve possible name and/or
date of birth discrepancies in the future (see sample at Appendix C).

**Comments Regarding Recommendations under Finding No. 1**

As set forth above, the University concurs with Finding No. 1 only to
the limited extent that it did not resolve certain CPS comment codes
generated after unsuccessful database matches. However, as demonstrated
by the enclosed supporting materials, in the vast majority of instances
identified by the audit the failure to resolve CPS comment codes did not
cause disbursements of Title IV, HEA funds to ineligible students.
Specifically, from among the 117 students noted in this finding, the
University has demonstrated that 108 were in fact eligible to receive
such funds. Funds that were disbursed to the nine remaining students
have already been returned. We therefore request that the Draft Audit
Report's recommendations regarding this matter be revised accordingly.

The Draft Audit Report's recommendation that Federal Student Aid ("FSA")
require a broader review of files from the 2004-05 award year to the
present -- based on what are isolated instances of noncompliance within
the audit sample -- is simply unwarranted. The above discussion
regarding Walden's compliance, supported by accompanying documentation,
reveals an error rate that is well below the Department's standard
compliance review threshold for requiring a full file review, let alone
a full file review spanning multiple award years.

Additionally, the Draft Audit Report's recommendation that FSA consider
fine proceedings regarding this matter is both uncalled for and
excessively punitive. As noted previously, as a percentage of total
files reviewed, the audit revealed only isolated instances of ineligible
disbursements, and such disbursements have since been returned by Walden
to the appropriate lenders. Such return of funds is the appropriate
remedial action, and the University has further implemented corrective
action to better ensure that CPS comment codes are appropriately
resolved in the future.

**FINDING NO. 2** -- **The University Did Not Adequately Resolve Comment
Codes after a**

**Match with NSLDS Indicated That Students Were Approaching or**

**Had Exceeded Aggregate Loan Limits**

The Draft Audit Report alleges that Walden did not properly consider
students' loan balances or adequately resolve comment codes regarding
aggregate loan limits and, as a result, awarded or disbursed \$445,184
of Federal Family Education Loan ("FFEL") and \$2,502 of Federal Work
Study ("FWS") program funds to students who had exceeded their aggregate
subsidized loan limit and/or aggregate total loan limit as established
by 34 C.F.R. § 682.204. As set forth in detail below, on a
student-by-student basis, the University disagrees with the OIG
regarding a majority of the questioned disbursements underlying this
finding.[^9]

Walden follows the Department's guidance regarding FFEL program limits
as set forth in Dear Colleague Letter GEN-97-3 (May 1997), which
includes the following relevant instructions:

+---------------------------------------------------------+------------+
| Example 5b: Determining a Graduate Borrower\'s          |            |
| Remaining Aggregate                                     |            |
|                                                         |            |
| Unsubsidized Loan Eligibility                           |            |
+---------------------------------------------------------+------------+
| Aggregate graduate loan limit for Unsubsidized Loans    | \$138,500  |
|                                                         |            |
| minus amount of Subsidized Loans received               | \- 65,500  |
|                                                         |            |
| minus amount of Unsubsidized Loan received              | [-         |
|                                                         | 0]{.       |
| remaining aggregate Unsubsidized Loan eligibility       | underline} |
|                                                         |            |
|                                                         | 73,000     |
+---------------------------------------------------------+------------+

> A graduate borrower who has received a **combined** amount of
> Subsidized and Unsubsidized Loans that equals or exceeds the \$65,500
> **aggregate** Subsidized limit continues to be eligible for Subsidized
> Loans until the borrower reaches the \$65,500 Subsidized limit. In
> addition, the borrower continues to qualify for Unsubsidized Loans
> until the borrower reaches the combined \$138,500
> Subsidized/Unsubsidized **aggregate** limit.

Additionally, any audit focused on ISIR and NSLDS processing during the
2005-06 award year must fairly consider the following circumstances:

-   Prior to March 2005, historical data on Outstanding Principal
    Balance ("OPB") and Outstanding Interest Balance ("OIB") amounts
    were not stored or displayed in NSLDS. Only in late March 2005 did
    NSLDS *begin the process* of storing and displaying such
    information. Thus, historical OPB and OIB data was simply not
    available through NSDLS to Walden at the time we awarded and
    disbursed many of the loans questioned by this audit.

-   In February 2006, NSLDS Newsletter No. 11 instructed financial aid
    administrators to change the methodology for calculating aggregate
    loan totals, specifically stating the following: *"For all of the
    reasons discussed here, as of January 2006, NSLDS, while continuing
    to report (on web pages and on ISIRs) unallocated amounts, does not
    use unallocated amounts when calculating aggregate subsidized,
    unsubsidized, and combined outstanding principal balances. Nor are
    FAAs required to investigate whether an unallocated amount might
    impact a student's eligibility for additional aid. This change to
    the FAA requirement is effective immediately. For system reasons,
    NSLDS did not make this change to 2005-2006 ISIRs."*

-   Because data provided on the NSLDS website is dynamic rather than
    static, it is impossible at any given point in time to determine
    what data was provided for a particular student on the site at any
    prior point in time. It is for this reason that Walden has relied
    heavily on ISIRs in reconstructing loan histories for students at
    issue in this audit. The NSLDS website may have information now
    available regarding those students that simply was not available at
    the time their loans were awarded and disbursed.

-   On October 20, 2006, the Department of Education identified an NSLDS
    post-screening system error that affected Aid Overpayment and ISIRs
    during the summer of 2006. The affected records contained incorrect
    overpayment information until corrected ISIRs were reprocessed by
    CPS. For nearly everyone involved in the administration of the Title
    IV programs, the 2005-06 award year was unusually confusing insofar
    as the accuracy and consistency of NSLDS historical loan data was
    concerned.

With the above as background, the University disputes the Draft Audit
Report's conclusions, in their entirely, with respect to the following
students (supporting documentation provided at Appendix E):

> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. The underlying loans for this student at
> the time her loans were disbursed totaled \$104,315, of which \$55,375
> were Subsidized loans. She was therefore eligible for the \$8,500
> Subsidized and \$10,000 Unsubsidized loans disbursed.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. An ISIR processed on 10/18/05 showed
> combined loans of \$137,058, of which \$20,000 were Subsidized loans.
> The student was thus eligible for the \$1,442 Subsidized loan
> disbursed (\$138,500 - \$137,058 = \$1,442). A subsequent ISIR
> processed on 01/05/06 confirms this eligibility.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-2006
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. An ISIR processed on 2/09/05 showed
> combined loans of \$103,505, of which \$36,199 were Subsidized loans.
> The student was thus eligible for the \$8,500 Subsidized loan
> disbursed and the \$10,000 Unsubsidized loan disbursed by 6/16/06
> (\$138,500 - \$103,505 = \$34,995). When the post-screened ISIR dated
> 7/11/06 arrived after the 2005-06 loans had fully disbursed.
>
> [\[Student Name Deleted\]]{.underline} -- This student was awarded and
> disbursed an \$11,334 Unsubsidized loan for the 2005-06 award year.
> Based upon an ISIR processed on 10/18/05, the student's Subsidized
> loans totaled \$5,108 with combined loans of \$37,000. The student was
> thus eligible for her \$11,334 Unsubsidized award.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of his 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. At the time of awarding, his underlying
> Subsidized loans totaled \$35,999 and aggregate combined \$107,595.
> Upon receipt of the post-screened ISIR dated 11/01/05 a determination
> was made that the student was not exceeding the aggregate limit, and
> the student is not presently exceeding aggregate loan limits.
> Therefore, he was eligible for his 2005-06 loan disbursements of
> \$8,500 Subsidized and \$10,000 Unsubsidized.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. As of 10/27/05 her underlying loan
> totals were \$53,459 Subsidized and \$113,364 combined. She was
> eligible for her \$12,334 in 2005-06 loan disbursements (\$2,296
> Subsidized loan and \$9,338 Unsubsidized loan).
>
> [\[Student Name Deleted\]]{.underline} -- At the time of 2005-06 loan
> disbursements, this student did not exceed either the graduate-level
> Subsidized aggregate limits of \$65,500 or the combined aggregate loan
> limit of \$138,500. An ISIR processed on 3/24/05 shows \$59,946 in
> total Subsidized and \$114,697 combined FFELP loans. The student was
> eligible for her \$5,554 Subsidized (\$65,500 - \$59,946 = \$5,554)
> and her \$12,946 Unsubsidized loan. She was also eligible for the
> renewal Unsubsidized Stafford Loan of \$5,303. This is confirmed by
> the ISIR processed 2/1/06.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of 2005-06 loan
> disbursements, this student did not exceed either the graduate-level
> Subsidized aggregate limits of \$65,500 or the combined aggregate loan
> limit of \$138,500. The calculated underlying loans for this student
> following her 2005-06 loan disbursements totaled \$114,906. She was
> eligible for both the \$8,500 subsidized and \$10,000 Unsubsidized
> loans awarded and disbursed.
>
> [\[Student Name Deleted\]]{.underline} --At the time of loan
> disbursements, this student did not exceed either the graduate-level
> Subsidized aggregate limit of \$65,500 or the combined aggregate limit
> of \$138,500. Her Subsidized and Unsubsidized loans had disbursements
> on 11/1//05 and 12/16/05. When her post-screen ISIR subsequently
> arrived on 1/10/06, her remaining 2005-06 loan disbursements were
> canceled.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized limit of \$65,500 or the combined limit of
> \$138,500 based on a calculation of her underlying loans.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of 2005-06 loan
> disbursements, this student did not exceed the graduate-level
> Subsidized aggregate limit of \$65,500. An ISIR processed on 3/28/05
> shows total Subsidized loans of \$40,511 and a combined aggregate
> total of \$72,008. Her \$5,067 Subsidized Stafford loans had
> disbursements on 12/16/05 and 3/17/06. It was not until 4/11/06,
> following two 2005-06 disbursements, that a post-screen ISIR provided
> any indication that the student was nearing her aggregate Subsidized
> limits. At that point, the student's two remaining 2005-06 Subsidized
> loan disbursements were canceled in order to prevent overpayment.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level subsidized aggregate limit of \$65,500 or the combined
> aggregated limit of \$138,500. An ISIR received on 1/3/05 showed total
> subsidized loans of \$42,500 and a combined aggregate total of
> \$92,500. When her ISIR contained a post-screen message that she was
> about to exceed her combined loan levels, her Unsubsidized Stafford
> was reduced to \$6,200. When a subsequent ISIR transaction arrived on
> 3/21/06, it reconfirmed that (including pending disbursements) she was
> no longer in danger of exceeding her combined loan limits.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level Subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. An ISIR received on 2/14/05 showed total
> Subsidized loans of \$59,328 and a combined aggregate total of
> \$133,931. Her \$4,569 Unsubsidized Stafford loans had disbursements
> on 6/17/05 and 7/22/05. It was not until 1/31/06, following all
> 2005-06 disbursements, that an ISIR post-screen transaction provided
> any indication that the student was nearing her aggregate loan limits.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of her 2005-06
> loan disbursements, this student did not exceed either the
> graduate-level subsidized aggregate limit of \$65,500 or the combined
> aggregate limit of \$138,500. An ISIR processed on 3/22/05 showed
> total Subsidized loans of \$20,162 and a combined total of \$96,806
> (\$138,500 -- \$96,806 = \$41,694 remaining Unsubsidized eligibility).
> The post-screen ISIR was not received until July 12, 2006, nearly four
> months following the student's final 2005-06 loan disbursement (and
> that post-screen ISIR further contained suspect information, counting
> \$91,503 of the student's consolidation loans toward the student's
> aggregate loan totals). The questionable information was later
> corrected. As of 2/13/07, this student's total unallocated
> consolidation loans totaled \$107,129 per the student's ISIR for
> 2006-07. The latter ISIR is further evidence that the student had not
> exceeded her FFEL program aggregate loan limits as of March 15, 2006.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of 2005-06 loan
> disbursements, this student did not exceed either the graduate-level
> subsidized aggregate limit of \$65,500 or the combined aggregate limit
> of \$138,500. The underlying loans for this student at the time his
> loans were disbursed totaled \$72,068, of which \$48,100 were
> Subsidized Stafford loans.

With respect to the following students, the University concurs that it
did not adequately resolve 2005-06 aggregate loan limits, but disputes
the specific amount of Title IV, HEA program funds claimed by the OIG as
needing to be returned to lenders (supporting documentation provided at
Appendix F):

> [\[Student Name Deleted\]]{.underline} -- The University has
> determined that a loan overpayment of \$9,763, rather than \$22,202 as
> indicated on the OIG work papers, had occurred during 2005-06. The net
> loan amount of \$9,470.11 has been returned to the lender.
>
> [\[Student Name Deleted\]]{.underline} -- We have calculated a \$6,335
> overpayment of Subsidized loans in 2005-06, and requested reallocation
> of \$2,462 of this student's 2005-06 Subsidized Stafford loan to her
> Unsubsidized Stafford loan. Therefore, the net amount returned to the
> lender was \$3,756.81.
>
> [\[Student Name Deleted\]]{.underline} -- An overpayment of \$6,125
> occurred, and we have subsequently reallocated all \$6,125 of this
> student's Subsidized Stafford loan to an Unsubsidized Stafford loan.
> The amount to be returned to the lender is therefore \$0.
>
> [\[Student Name Deleted\]]{.underline} -- The University's
> calculations indicate that there was an overpayment of \$13,756 in
> 2005-06 rather than \$15,935 as indicated on the OIG work papers. A
> net loan amount of \$13,328.55 has been returned to the lender.
>
> [\[Student Name Deleted\]]{.underline} -- An overpayment of \$1,276
> occurred, and we have subsequently reallocated \$1,276 of the
> student's Subsidized loan to her Unsubsidized loan. Therefore, the
> amount to be returned to the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- We have determined there was
> an \$8,500 overpayment of Subsidized loans, and have subsequently
> reallocated the entire amount to his Unsubsidized loan. Therefore, the
> amount to be returned to the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- We have calculated a \$1,734
> overpayment of Subsidized loans, which have been subsequently
> reallocated to the student's Unsubsidized loan. Therefore, the amount
> to be returned to the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of loan
> disbursements, this student did exceed the graduate-level Subsidized
> aggregate limit of \$65,500. The funds cannot be reallocated because
> the underlying loan has been consolidated, and the holder of the
> consolidated loan has denied our request to reallocate the funds.
> Therefore, we consider the consolidation to be reaffirmation of the
> debt and correction of the overpayment.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of loan
> disbursements, this student did exceed the graduate-level Subsidized
> aggregate limit of \$65,500. The underlying loans for this student at
> the time her loans were disbursed totaled \$116,345, which is below
> the combined aggregate limit of \$138,500. We have subsequently
> reallocated \$7,519 of the 2005-06 subsidized loan overpayments to her
> 2005-06 unsubsidized loans. Therefore, the amount to be returned to
> the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of loan
> disbursements, this student did exceed the graduate-level Subsidized
> aggregate limit of \$65,500. The underlying loans for this student at
> the time of her loan disbursements totaled \$101,726, which is below
> the combined aggregate limit of \$138,500. We have subsequently
> reallocated \$6,646 of the 2005-06 Subsidized loan overpayments to her
> 2005-06 Unsubsidized loans. Therefore, the amount to be returned to
> the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- At the time of loan
> disbursements, this student did exceed the graduate-level subsidized
> aggregate limit of \$65,500. The underlying subsidized loans for this
> student at the time her loans were disbursed totaled \$58,416 and her
> combined aggregate total was \$112,322, which is below the combined
> aggregate limit of \$138,500. We have subsequently reallocated \$1,416
> of 2005-06 Subsidized loan overpayments to her 2005-06 Unsubsidized
> loans. Therefore, the amount to be returned to the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- We have determined there was
> a \$12,886 overpayment of Subsidized loans and reallocated the entire
> amount to the student's Unsubsidized loan. Therefore, the amount to be
> returned to the lender is \$0.
>
> [\[Student Name Deleted\]]{.underline} -- We have reallocated \$8,500
> from Subsidized to Unsubsidized and returned an overpayment of
> Unsubsidized loan funds in the net amount of \$3,993.49.
>
> [\[Student Name Deleted\]]{.underline} -- Based on a calculation of
> underlying loans, we have determined there was a \$2,008 overpayment
> of Subsidized loan and \$5,696 Unsubsidized loan. We have returned a
> net loan amount of \$7,472.88.
>
> [\[Student Name Deleted\]]{.underline} -- The University has
> calculated an overpayment of \$6,146 rather than \$18,500, and
> returned such amount to the lender.
>
> [\[Student Name Deleted\]]{.underline} -- We have determined an
> overpayment of \$1,636 of Subsidized loans and reallocated the entire
> amount to an Unsubsidized loan. Therefore, the amount to be returned
> to the lender is \$0.

The University concurs with the OIG concerning the following students
and has returned pertinent Title IV loan funds to the appropriate
lenders for the 2005-06 aid year (supporting documentation provided at
Appendix G):

> [\[Student Name Deleted\]]{.underline} -- We have returned a net loan
> amount of \$8,302.23.
>
> [\[Student Name Deleted\]]{.underline} -- We have returned a net loan
> amount of \$9,879.45.
>
> [\[Student Name Deleted\]]{.underline} -- We have returned \$4,448 to
> the lender (\$2,596 Subsidized and \$1,852 Unsubsidized).
>
> [\[Student Name Deleted\]]{.underline} -- We have returned a net loan
> amount of \$17,945.00.
>
> [\[Student Name Deleted\]]{.underline} -- We have requested a check to
> return a net loan amount of \$5,981.99.
>
> [\[Student Name Deleted\]]{.underline} -- We have returned \$3,880 as
> the net amount of the loan overpayment.
>
> [\[Student Name Deleted\]]{.underline} -- We have requested a check to
> return a net loan amount of \$3,233.98.
>
> [\[Student Name Deleted\]]{.underline} -- We have returned a net loan
> amount of \$5,577.50.
>
> [\[Student Name Deleted\]]{.underline} -- We have requested a check to
> return a net loan amount of \$6,254.56.

The Draft Audit Report further alleges that because of its failure to
resolve FFEL loan limits, Walden also improperly disbursed \$2,502 of
FWS program funds to one student. We disagree. Assuming that the student
received an overpayment of loan funds, the return of which has been
documented herein, the student was then eligible for the FWS
disbursement (see supporting documentation provided at Appendix G).

**Comments Regarding Recommendations under Finding No. 2**

As described above and evidenced by the supporting documents, the
University has returned all Title IV, HEA funds that it has determined
were overpayments for the 2005-06 award year. We disagree with the OIG
that any other 2005-06 awards were inappropriate, based on information
that was available at the time of 2005-06 disbursements. Walden
therefore asserts that no further returns of funds are required with
respect to the 2005-06 award year.

With respect to the University's policies and procedures for reviewing
and resolving CPS comment codes, we have already revised and
strengthened such policies and procedures in the years following the
period covered by the audit. Specifically, in August 2007, the
University revised its procedure for documenting NSLDS values when
reviewing aggregate totals directly from the NSLDS website, and provided
training to all staff on the revised procedures and NSLDS review. In
January 2008, we restructured the financial aid awarding team, including
the hiring of a new manager and additional staff. At the same time, the
University strengthened its NSLDS review and coding for students who
receive "renewal loans" (two loan years from one ISIR), and financial
aid staff received special training to review NSLDS for renewal
students. Also, our internal reporting system was modified to separate
renewal students who were close to aggregate loan limits from those who
were not. Most recently, in March 2008, we adopted significant changes
to the coding and quality control features of the PowerFAIDS software,
which are designed to prevent manual errors pertaining to NSLDS and to
correct errors before funds are disbursed. All staff responsible for
resolving comment codes have been trained or retrained, as appropriate,
as have staff responsible for packaging and disbursing FFELP loans (see
supporting documentation at Appendix H).

Walden further disagrees with the Draft Audit Report's recommendation
that FSA require a broader review of files from the 2004-05 award year
to the present. As set forth above and supported by the accompanying
materials, Finding No. 2 is significantly based on what the University
asserts are incorrect conclusions by the OIG regarding students'
eligibility for loan disbursements during the 2005-06 award year. This,
combined with the NSLDS weaknesses and problems acknowledged by the
Department during that same award year, render a broader file review as
excessive and unwarranted.

Additionally, as with the previous finding, the Draft Audit Report's
recommendation that FSA consider fine proceedings regarding this matter
is both uncalled for and excessively punitive. The University has
examined all of the students questioned by the audit, returned
appropriate funds to lenders, and previously implemented enhanced
policies and procedures to prevent future similar occurrences. To
initiate any fine proceeding regarding this matter would also be
inequitable, as the Department itself acknowledged various problems in
NSLDS during the 2005-06 award year that affected not only Walden, but
all institutions participating in the Title IV loan programs.

Attachment 2: Detailed Tables Documenting Finding No. 2 Questioned Costs
and OIG Comments on the University's Response

**[Group 1: The University Did Not Concur (15 of the 40 Students
Questioned)]{.underline}**

The University disagreed entirely with the OIG's conclusion that 15 (of
40) students had exceeded their aggregate loan limits and received
improper disbursements totaling \$117,510. We reviewed the University's
response, along with the additional documentation, and disagree with the
University for all 15 students.

The University's primary argument was that the students did not exceed
the aggregate limits during the 2005-2006 award year. We agree that, in
many instances, there were not improper disbursements during that year.
However, improper disbursements were made during the 2006-2007 and
2007-2008 award years.

As part of our analysis, we reviewed the student loan activity using
NSLDS as of October 2008. Even though the University disagreed with this
finding, it has refunded or canceled \$55,777 and reclassified \$12,646
of subsidized loan disbursements, which restored students' eligibility
for \$4,978 of the previously improper unsubsidized loan disbursements.
Disbursements for 6 of the originally disputed 15 students have not been
fully resolved, and \$44,109 remains in question.

+------+-------------+------------+----------+--------+--------------+
| **T  |             |            |          |        |              |
| able |             |            |          |        |              |
| 5.   |             |            |          |        |              |
| The  |             |            |          |        |              |
| Un   |             |            |          |        |              |
| iver |             |            |          |        |              |
| sity |             |            |          |        |              |
| Did  |             |            |          |        |              |
| Not  |             |            |          |        |              |
| Conc |             |            |          |        |              |
| ur** |             |            |          |        |              |
+------+-------------+------------+----------+--------+--------------+
| Stu  | Questioned  | Amount     |          | Re     | Remaining    |
| dent | In Draft    | University |          | stored | Questioned   |
|      | Report      | Actually   |          | Eligi  | Costs        |
|      |             |            |          | bility |              |
+------+-------------+------------+----------+--------+--------------+
|      |             | Refunded/  | Rea      |        |              |
|      |             | Canceled   | llocated |        |              |
+------+-------------+------------+----------+--------+--------------+
| 1\.  | \$7,105     | \$7,105    | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 2\.  | \$6,167     | \$6,167    | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 3\.  | \$13,415    | \$13,415   | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 4\.  | \* \$13,987 | \$0        | \$0      |        | \$13,987     |
+------+-------------+------------+----------+--------+--------------+
| 5\.  | \* \$1,243  | \$0        | \$1,243  |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 6\.  | \* \$3,265  | \$0        | \$0      |        | \$3,265      |
+------+-------------+------------+----------+--------+--------------+
| 7\.  | \$5,303     | \$5,303    | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 8\.  | \$11,442    | \$0        | \$0      |        | \$11,442     |
+------+-------------+------------+----------+--------+--------------+
| 9\.  | \$1,395     | \$0        | \$0      |        | \$1,395      |
+------+-------------+------------+----------+--------+--------------+
| 10\. | \*\$17,593  | \$17,593   | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 11\. | \$8,500     | \$0        | \$8,500  |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 12\. | \$6,194     | \$6,194    | \$0      |        | \$0          |
+------+-------------+------------+----------+--------+--------------+
| 13\. | Not         |            |          |        |              |
|      | included in |            |          |        |              |
|      | the         |            |          |        |              |
|      | questioned  |            |          |        |              |
|      | costs.      |            |          |        |              |
|      | Probably    |            |          |        |              |
|      | confused    |            |          |        |              |
|      | her with    |            |          |        |              |
|      | the student |            |          |        |              |
|      | below. The  |            |          |        |              |
|      | student was |            |          |        |              |
|      | not on any  |            |          |        |              |
|      | list and    |            |          |        |              |
|      | had same    |            |          |        |              |
|      | first name. |            |          |        |              |
+------+-------------+------------+----------+--------+--------------+
| 13x. | \*\*        |            |          |        | \$8,711      |
|      | \$8,711     |            |          |        |              |
+------+-------------+------------+----------+--------+--------------+
| 14\. | \* \$5,309  | \$0        | \$0      |        | \$5,309      |
+------+-------------+------------+----------+--------+--------------+
| 15\. | \$7,881     | \$0        | \$2,903  | \$     | \$0          |
|      |             |            |          | 4,978  |              |
+------+-------------+------------+----------+--------+--------------+
| T    | \$117,510   | \$55,777   | \$12,646 | \$     | \$44,109     |
| otal |             |            |          | 4,978  |              |
+------+-------------+------------+----------+--------+--------------+
| \*   |             |            |          |        |              |
| Qu   |             |            |          |        |              |
| esti |             |            |          |        |              |
| oned |             |            |          |        |              |
| am   |             |            |          |        |              |
| ount |             |            |          |        |              |
| had  |             |            |          |        |              |
| been |             |            |          |        |              |
| adju |             |            |          |        |              |
| sted |             |            |          |        |              |
| up   |             |            |          |        |              |
| or   |             |            |          |        |              |
| down |             |            |          |        |              |
| from |             |            |          |        |              |
| d    |             |            |          |        |              |
| raft |             |            |          |        |              |
| re   |             |            |          |        |              |
| port |             |            |          |        |              |
| amo  |             |            |          |        |              |
| unt. |             |            |          |        |              |
|      |             |            |          |        |              |
| \*\* |             |            |          |        |              |
| Stu  |             |            |          |        |              |
| dent |             |            |          |        |              |
| not  |             |            |          |        |              |
| a    |             |            |          |        |              |
| ddre |             |            |          |        |              |
| ssed |             |            |          |        |              |
| (has |             |            |          |        |              |
| the  |             |            |          |        |              |
| same |             |            |          |        |              |
| f    |             |            |          |        |              |
| irst |             |            |          |        |              |
| name |             |            |          |        |              |
| as   |             |            |          |        |              |
| Stu  |             |            |          |        |              |
| dent |             |            |          |        |              |
| No.  |             |            |          |        |              |
| 1    |             |            |          |        |              |
| 3x). |             |            |          |        |              |
+------+-------------+------------+----------+--------+--------------+

**Group 2: The University Concurred that An Overaward Existed but
Disputed the Amount (16 of the 40 Students Questioned)**

The University concurred that it did not adequately resolve 2005-2006
aggregate loan limits for the second group of students. However, the
University disputed the amount of Title IV, HEA program funds that
should be returned to lenders.

We analyzed the University's response, the additional documentation
submitted by the University, and recent NSLDS data (as of October 2008).
We noted that the amounts disputed by the University were, generally,
for improper disbursements made during the 2006-2007 and 2007-2008 award
years. We questioned the loan amounts for these subsequent years because
the University had been put on notice in 2005-2006 that these students
were in danger of exceeding aggregate loan limits. Also, as we noted for
Group 1, regardless of its stated non-concurrence, the University made
refunds and cancellations and reclassified subsidized amounts as
unsubsidized for these students, fully clearing all improper loan
disbursements for 9 of the 16 loans. These actions also restored
students' eligibility for \$99,407 in loan funds. However, \$43,724
remains in question.

  ------------ ------------ ------------- ------------- ------------- ------------
  **Table 6.                                                          
  University                                                          
  Concurred                                                           
  Partially                                                           
  (There Was                                                          
  An Overaward                                                        
  but Disputed                                                        
  Amount)**                                                           

  Student      Questioned   Amount                      Eligibility   Remaining
               In Draft     University                  Restored      Questioned
               Report       Actually                                  Costs

                            Refunded/     Reallocated                 
                            Canceled                                  

  1            \$22,202     \$9,763       \$3,756       \$8,683       \$0

  2            \$6,335      \$3,757       \$0           \$0           \$2,578

  3            \$23,208     \$0           \$6,125       \$17,083      \$0

  4            \*\$13,756   \$13,329      \$0           \$0           \$427

  5            \$12,019     \$471         \$1,276       \$10,272      \$0

  6            \$8,500      \$0           \$8,500       \$0           \$0

  7            \$1,734      \$0           \$1,734       \$0           \$0

  8            \$9,516      \$0           \$0           \$0           \$9,516

  9            \$48,785     \$428         \$7,519       \$40,838      \$0

  10           \$12,332     \$0           \$7,520       \$4,812       \$0

  11           \$3,583      \$0           \$1,416       \$2,167       \$0

  12           \$22,555     \$0           \$12,886      \$9,669       \$0

  13           \$18,500     \$0           \$8,500       \$5,883       \$4,117

  14           \$14,340     \$7,473       \$0           \$0           \$6,867

  15           \$18,500     \$6,138       \$0           \$0           \$12,362

  16           \$9,493      \$0           \$1,636       \$0           \$7,857

  Total        \$245,358    \$41,359      \$60,868      \$99,407      \$43,724

  \*                                                                  
  Questioned                                                          
  amount had                                                          
  been                                                                
  adjusted                                                            
  down from                                                           
  draft report                                                        
  amount                                                              
  ------------ ------------ ------------- ------------- ------------- ------------

**Group 3 - The University Concurred and Returned the Pertinent
2005-2006 Award Year Title IV, HEA Program Loan Funds (9 of the 40
Students Questioned)**

The University concurred with the OIG concerning the third group of
students and indicated it returned Title IV, HEA program funds to the
appropriate lenders for the 2005-2006 award year. We reviewed the
University's response and the supporting documentation. We accepted the
support for 7 of the 9 students. For the remaining 2 students, the
University stated that a check request was made for the net amount but
did not provide support that the funds were returned to the lender. As
of October 2008, NSLDS records for the 2 students did not reflect that
Title IV, HEA program funds had been returned. Therefore, the OIG does
not agree with the amount of Title IV, HEA program funds that were
returned, and \$9,782 remains in question.

+-------+----------+--------------+------------+----------+-----------+
| **    |          |              |            |          |           |
| Table |          |              |            |          |           |
| 7.    |          |              |            |          |           |
| Imp   |          |              |            |          |           |
| roper |          |              |            |          |           |
| Dis   |          |              |            |          |           |
| burse |          |              |            |          |           |
| ments |          |              |            |          |           |
| with  |          |              |            |          |           |
| Which |          |              |            |          |           |
| the   |          |              |            |          |           |
| Unive |          |              |            |          |           |
| rsity |          |              |            |          |           |
| Conc  |          |              |            |          |           |
| urred |          |              |            |          |           |
| and   |          |              |            |          |           |
| Cl    |          |              |            |          |           |
| aimed |          |              |            |          |           |
| to    |          |              |            |          |           |
| Have  |          |              |            |          |           |
| Refun |          |              |            |          |           |
| ded** |          |              |            |          |           |
+-------+----------+--------------+------------+----------+-----------+
| St    | Qu       | Amount       |            | Eli      | Remaining |
| udent | estioned | University   |            | gibility | Q         |
|       | in Draft | Actually     |            | Restored | uestioned |
|       | Report   |              |            |          | Costs     |
+-------+----------+--------------+------------+----------+-----------+
|       |          | Refunded/    | R          |          |           |
|       |          |              | eallocated |          |           |
|       |          | Canceled     |            |          |           |
+-------+----------+--------------+------------+----------+-----------+
| 1     | \$27,059 | \$27,059     | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 2     | \$10,185 | \$10,185     | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 3     | \$4,448  | \$4,448      | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 4     | \$18,500 | \$18,500     | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 5     | \$6,167  | \$6,167      | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 6     | \$4,000  | \$4,000      | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 7     | \$3,334  | \$0          | \$0        | \$0      | \$3,334   |
+-------+----------+--------------+------------+----------+-----------+
| 8     | \$5,750  | \$5,750      | \$0        | \$0      | \$0       |
+-------+----------+--------------+------------+----------+-----------+
| 9     | \$6,448  | \$0          | \$0        | \$0      | \$6,448   |
+-------+----------+--------------+------------+----------+-----------+
| Total | \$85,891 | \$76,109     | \$0        | \$0      | \$9,782   |
+-------+----------+--------------+------------+----------+-----------+

[^1]: Our sample size was not sufficient to project the results of our
    sample to the remaining 292 students.

[^2]: Aggregate loan limits are established in 34 C.F.R. § 682.204.
    During the audit period, the maximum aggregate unpaid principal
    amount of all Federal Stafford Loan Program loans and Federal Direct
    Stafford/Ford Loan Program loans was \$23,000 for a student who had
    not successfully completed a program of study at the undergraduate
    level, and \$65,500, including loans for undergraduate study, for a
    graduate or professional student. The combined Federal Stafford,
    SLS, and Federal Unsubsidized Stafford Loan Program aggregate limits
    were \$46,000 for an undergraduate student and \$138,500 for a
    graduate or professional student.

[^3]: We discovered that we originally overlooked improper disbursements
    made for one student, overstated aggregate balances for two
    students, and allowed for minor reductions for subsequent loan
    payments for four others.

[^4]: \$44,109 for Group 1 plus \$43,724 for Group 2 plus \$9,782 for
    Group 3

[^5]: A secondary confirmation for citizenship was not obtained for one
    student, and one student was disbursed Title IV, HEA program funds
    over the student's aggregate loan limit. Based on our initial tests
    of 30 students, we narrowed the universe to include only comment
    codes related to the two issues found.

[^6]: We used the information contained in CPS to perform our queries
    and narrow our student listing to include only comment codes
    specific to citizenship status (8 comment codes) and aggregate loan
    limits (4 comment codes).

[^7]: The University was required to begin a secondary confirmation with
    DHS to confirm eligibility of citizenship status for 17 (of 18)
    students. The remaining student had a missing or invalid Alien
    Registration Number requiring the student to submit proof of
    noncitizen eligibility to the University.

[^8]: The University is unable to return loan funds to the lender in
    this instance, as the loan has been repaid in full by the borrower.

[^9]: During the performance of the audit and in conjunction with the
    Draft Audit Report, the auditors provided Walden with various work
    papers and spreadsheets purporting to support Finding No. 2. These
    comments and the accompanying supporting documents therefore respond
    to the student-specific information provided by the OIG in its
    disclosed work papers. If Finding No. 2 is based, in any part, on
    data or work papers not previously shared with the University, we
    respectfully request that it be promptly provided for our review and
    comment prior to the issuance of any Final Audit Report.