§ 121.59. Error rate policy.
(a) The staff of the Agency will extract a random sample of all accounts at an institution that is undergoing a review of its program administration. Institutions will then be categorized according to their error rate in administration of State grants as follows:
(1) Error rate of 4.0% or less. This is an acceptable rate signifying that the institution is complying with PHEAA grant program guidelines. It will be assumed that the discrepancies found had been caused by a misinterpretation of the guidelines or by a mistake on the part of the financial aid officer or staff of the institution. No further action will be required other than a letter to the institution identifying the discrepancies and requesting a refund of those awards for ineligible higher education grant recipients identified in the sample.
(2) Error rate of 4.1%—8.9%. This rate indicates repeated failure to comply with certain program guidelines or that somewhat general discrepancies exist within the internal control of the institution as it applies to financial aid. The Agency will request a refund on behalf of those ineligible higher education grant recipients identified in the sample. A letter will be sent to the institution pointing out the problems and recommending necessary action to be taken by the institution with the stipulation that within 12 to 18 months a followup review will be conducted, at which point in time the calculated error rate is expected to be within the acceptable range. If, at this time, the error rate is not acceptable, a decision will be made regarding whether or not the institution shall continue to receive grant disbursements and as to whether or not a review based on a valid statistical sample is required.
(3) Error rate of 9% or more. This rate indicates that serious weaknesses or the possibility of fraud exists within the institution’s administration of the program. The Agency will schedule a program followup to be conducted at the earliest possible date. All disbursements to the institution may be withheld pending the results of the follow-up review. The followup review will be based on a valid statistical sample which will be prepared by the Agency. This valid statistical sample will identify the accounts to be evaluated in the follow-up review. The Agency will request a refund for those higher education grant recipients identified as refund cases during the initial and follow-up reviews and make a determination as to the continued eligibility of the institution for PHEAA’s programs of student financial assistance.
(b) The Agency may conduct further examinations of student aid and related records as it deems necessary to protect the financial interests of the Agency or its student aid recipients.
Authority The provisons of this § 121.59 issued under the act of August 7, 1963 (P. L. 549, No. 290) (24 P. S. § 5104); the act of January 25, 1966 (P. L. 1546, No. 541) (24 P. S. § 5151); the act of October 11, 1972 (P. L. 909, No. 216) (24 P. S. § 5171); and the act of October 11, 1972 (P. L. 899, No. 213) (24 P. S. § 5161).
Source The provisions of this § 121.59 adopted August 29, 1980, effective August 30, 1980, 10 Pa.B. 3510.
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