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LSCS gave nearly $14M in grants to ineligible students

November 27, 2018

The Lone Star College System announced last week that a federal audit determined it gave out $13.8 million of financial aid to ineligible students over a four-year period.

The announcement came after college officials received a final program review from the Department of Education: the millions of incorrectly awarded aid was in the form of Pell Grants, Supplemental Education Opportunity Grants and federal loans and made up about 2 percent of the almost $663 million awarded from 2012 to 2016.

LSC Chief Financial Officer Jennifer Mott said that the students who incorrectly received the funds would not be responsible for paying the almost $14 million back — the college would shell it out from its reserves.

“This is not something we want to happen, but this is why for a couple of years now we made building up our reserves a priority so we can deal with this or Hurricane Harvey and still continue operations,” Mott said.

Regardless, Mott said she plans to file an appeal of the findings, which would be due Dec. 7. First, they need to review records, she said.

Out of the 17,000 records the system handed over to the Department of Education, more than 6,000 of them were found to be linked to students who were deemed ineligible for financial aid because they either attended ineligible high schools or did not meet the satisfactory academic progress requirements, which include a minimum GPA, their completion rate and total number of credit hours.

In total, that makes up about 6,300 students across the four audited years. Mott said while some of those students may not have met the academic criteria at a glance, they may have filed an appeal showing that they still qualify for financial aid due to extenuating circumstances.

“If we granted (the students) an appeal, then they can still receive financial aid,” Mott said.

Mott said college officials have pulled boxes of documents from storage to review and search for the proper documentation.

“If we are able to find documentation that the students were correctly given financial aid, then hopefully we can remove those amounts from the $13.8 million,” Mott added.

The federal audit process began in August 2016 when the Department of Education notified LSC system officials that they would be conducting an off-site review. That summer, the college hired a consulting firm to conduct an audit of their financial operations. In February 2017, the Department of Education issued a program review report where the department identified the system’s areas of noncompliance.

It was then that Lone Star officials had two responses in which they provided documentation and detailed their plan to make the necessary changes. This October, college officials received the final program review determination of the system’s liabilities from the Department of Education.

Mott said that even before they received the reports, the system was making changes and addressing policies and procedures to rectify the issue.

Such changes included hiring a new executive vice chancellor of Academic and Student Affairs, part of whose duties are to oversee the financial aid office, the creation of an Office of Governance, Audit and Compliance to ensure audit concerns are addressed. Mott also took over the financial aid office in March.

“As an institution, we have 99,000 students. For every one of those who applied for financial aid, every semester, we have to process it. To some extent, part of our challenge is the sheer volume we have to get through,” Mott said in regard to their procedures.

Mott was realistic about that picture: even if they’ve made the necessary corrections and are now operating as they should be, they still have to settle the bill with the Department of Education.

“Having this liability doesn’t mean that we haven’t corrected anything. If we did historically give incorrect funding, we still owe back the funds,” Mott said.

jane.stueckemann@chron.com

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