Audit uncovers overpayment of financial aid to hundreds of Nevada college students

College of Southern Nevada over-awarded and under-awarded federal financial aid money to hundreds of students in the past two school years, the school announced today.

The community college — Nevada’s largest higher education institution serving more than 40,000 students — attributed the incorrect financial aid disbursements to “human error in the financial aid verification process.”

“This is a serious issue,” said Patricia Charlton, CSN’s senior vice president of finance and administration. “Anytime a student is affected, it’s a serious issue.”

CSN was made aware of the “processing errors” during a third-party assessment of financial aid awards for the 2011-12 school year. Errors included missing documentation, miscalculation of the cost of attendance for part-time students and “lack of quality assurance measures to ensure accuracy” when staff member reviewed financial aid documents.

“Even though we’re big, we’ve got to make sure we’re as transparent and accurate as possible,” said CSN President Michael Richards. “We happen to think this finding is unacceptable. We’ve got to perform better.”

Each year, the Nevada System of Higher Education conducts an audit of CSN’s financial aid awards, which are used by eligible students for tuition, fees and living costs. For the past couple of years, accounting firm Grant Thorton LLP performed CSN’s audit.

After approval by Nevada’s Board of Regents each December, the school’s audit is then submitted to the U.S. Department of Education for review. Earlier this year, the Education Department requested that CSN verify its audit’s findings.

CSN contracted with ProEducation Solutions to verify its financial aid awards, case by case. The company found problems during its initial assessment, prompting CSN to request ProEducation Solutions conduct a similar assessment for the 2012-13 school year. That second assessment is being finalized at this time.

Initial findings of the assessments found CSN over-awarded federal financial aid money to hundreds of students. CSN did not release the number of students affected nor the amount of money over-awarded to students, pending the final results of the second assessment.

Once the total is determined, CSN plans to pay back the funds immediately to the U.S. Education Department using “institutional reserve” money from auxiliary services, such as vending machines, Charlton said. Funds generated by the state and student fees will not be used.

Students who benefited from receiving more financial aid than they should have will not be penalized or forced to pay back their aid awards.

“It’s the institution’s obligation to pay this back to the Department of Education,” Richards said.

ProEducation Solutions’ verification process also found that in a smaller number of cases, CSN under-awarded federal financial aid to students. CSN plans to process these corrections and distribute appropriate funds to students. CSN will be reimbursed by the federal government for the corrected awards.

ProEducation Solutions also will conduct a third assessment to verify financial aid disbursements for the 2013-14 school year also. Richards said he was confident there would be no financial aid errors this school year because of this pre-emptive assessment.

“They have all been verified. They are accurate,” Richards said. “We have high confidence in them.”

In addition, CSN is looking to hire financial consultants to look at ways to improve its quality assurance and plans to conduct more staff training in financial aid disbursements. The college also has placed the responsibility of overseeing financial aid to Charlton, who oversees the college’s financial operations.

This news comes one day after Santos Martinez, CSN’s vice president of student affairs, resigned. Martinez, who was appointed to the position in June 2012 by Richards, oversaw CSN’s financial aid program, among other services such as counseling, registration and tutoring.

CSN would not further discuss Martinez’s resignation.

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