oversight

Indiana State University's Policies and Procedures Covering Educational Programs and Courses Delivered Through Distance Education Methods.

Published by the Department of Education, Office of Inspector General on 2001-05-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Finding No. 1 – ISU’s Policies and Procedures Did Not Ensure That Enrollment Status
                Was Properly Determined for Students Taking Correspondence Courses

ISU offered educational courses to its students through on-campus instruction and through
various distance education methods, including correspondence. Federal regulations contain
provisions restricting the Title IV eligibility of students taking courses through correspondence.
ISU’s procedures for determining a student’s enrollment status did not take into consideration
these restrictions.

A student’s enrollment status (full-time, three-quarter-time, half-time, or less-than-half-time) is
used to determine the amount of funds a student is eligible to receive under the Pell Grant
Program. Within the definition of a half-time student, Title 34 CFR § 690.2(c)(2) states that
“regardless of the work, no student enrolled solely in correspondence study is considered more
than a half-time student.”

Title 34 CFR § 690.8 restricts the amount of correspondence work that may be included in
determining the enrollment status of students taking both regular and correspondence courses.
Paragraph (b)(3) of the section limits the correspondence work to the amount of work that “does
not exceed the amount of a student’s regular course work for the payment period for which the
student’s enrollment status is being calculated.” Paragraphs (c) and (d) provide additional
guidance on the application of this limitation.

Our review found that ISU overawarded Pell Grant Funds because it did not have policies and
procedures to consider the limitations in 34 CFR §§ 690.2 and 690.8 in determining the
enrollment status of students taking semester-based correspondence courses.1

We reviewed student records for 25 students who were enrolled in one or more semester-based
correspondence courses during award year 1999-2000 and received Title IV funds during the
award year. 2 The enrollment status used to calculate the Pell Grant award for 10 of the 25
students was not in compliance with the regulations.

    •    Five of the 25 students were enrolled solely in correspondence courses during the award
         year. For 2 of the 5 students, ISU did not comply with 34 CFR § 690.2. ISU improperly
         disbursed a total of $3,124 ($1,562 for each student) in excess of the Pell grant amounts
         that the students were eligible to receive.

    •    Twenty of the 25 students were enrolled in a combination of semester-based
         correspondence and other courses during the award year. For 8 of the 20 students,

1
 ISU students enroll in correspondence and other distance education courses under either a semester-
based or year-based program of study. The institution only considered students enrolled in semester-
based programs as eligible for Title IV programs.
2
  The 25 students were part of our 50 student sample of the 922 students who were enrolled in one or
more distance education courses during award year 1999-2000 and received Title IV funds during the
award year. Of the 922 students, 633 students were enrolled in one or more semester-based
correspondence courses in one or both semesters. Of these 633 students, 342 received Pell Grants during
the 1999-2000 award year.


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         ISU did not comply with 34 CFR § 690.8. ISU improperly disbursed a total of $6,562 in
         excess of the Pell grant amounts that the students were eligible to receive. The excess
         amounts for individual students ranged from $234 to $1,562.

We used a judgmental rather than random basis to select the students whose school records were
reviewed during our audit. Therefore, results from our review of the 25 students may or may not
be representative of the Pell Grant funds awarded to students who were enrolled in at least one
semester-based correspondence course during award year 1999-2000. In the award year, a total
of 17 students, who were enrolled solely in semester-based correspondence courses, received
Pell Grant funds. A total of 325 students, who were enrolled in a combination of semester-based
correspondence and other courses, received Pell Grant funds.

Recommendations

The Chief Operating Officer for Student Financial Assistance should require ISU to:

1.1.     Revise its policies and procedures for calculating Pell Grant awards to ensure the
         institution complies with the limitation on Pell Grant awards for students enrolled in
         correspondence courses.

1.2.     Identify and return Pell Grant funds disbursed to students enrolled in correspondence
         courses that exceeded the allowable amount. The amount returned should include
         improperly disbursed funds for students enrolled in correspondence courses on and after
         July 1, 1999 (the beginning of our audit period).

ISU’s Comments

ISU stated that the necessary modifications would be made to its current policies and procedures
to ensure compliance with the regulations. ISU agreed to identify and return the improperly
disbursed Pell Grant funds.


Finding No. 2 – ISU’s Policies and Procedures Did Not Ensure That Students Completed
                the Required Percentage of Correspondence Courses Prior to Disbursing
                Pell Grant Funds

ISU policies and procedures did not require that students enrolled solely in correspondence study
complete the required percentage of course work prior to disbursing Pell Grant funds. Title
34 CFR § 690.66 (c) states:

         In a program of correspondence study offered by correspondence courses using
         terms but not including any residential component –
                                               *****
         (4) The institution shall make the payment to a student for a payment period after
         that student completes 50 percent of the lessons or otherwise completes
         50 percent of the work scheduled for the term, whichever occurs last.




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ISU’s financial aid office disbursed Pell Grant funds to students enrolled solely in
correspondence courses on the same disbursement schedule as students enrolled in other
programs and courses. The financial aid office did not confirm that the students had completed
50 percent of the course work prior to making the disbursements.

Currently, the number of students subject to the 50 percent completion requirements is small.
Only 21 students at ISU were enrolled solely in semester-based correspondence courses during
award year 1999-2000, and only 17 of the 21 students received Pell Grant funds during the
award year.

Recommendation

The Chief Operating Officer for Student Financial Assistance should require ISU to:

2.1. Implement policies and procedures that ensure students in a program of solely
      correspondence study have completed the required percentage of their courses prior to
      disbursing Pell Grant funds.

ISU’s Comments

ISU stated that the necessary modifications would be made to its current policies and procedures
to ensure compliance with the regulations.


Finding No. 3 – ISU Did Not Have Policies and Procedures for Ensuring Adherence to
                Institutional Eligibility Limitation on Correspondence Courses and
                Students

ISU did not perform the calculations to ensure that the institution did not exceed the allowed
maximum number of correspondence courses offered in a semester and maximum student
enrollment in correspondence courses. ISU had no such policies and procedures in place.

An institution loses its eligibility to participate in Title IV programs if, during its latest award
year, its correspondence courses represented more than 50 percent of its courses or more than
50 percent of its students were enrolled in correspondences courses. Title 34 CFR § 600.7 states:
         (a) …an educational institution…does not qualify as an eligible institution under
             this part if 
             (1) For its latest complete award year—
             (i) More than 50 percent of the institution’s courses were correspondence
                  courses…;
             (ii) Fifty percent or more of the institution’s regular enrolled students were in
                  enrolled in correspondence courses….

For purposes of this calculation, telecommunication courses3 are considered to be

3
 A telecommunication course is defined as a course offered principally through television, audio or
computer transmission, including open broadcast, closed circuit, cable, microwave satellite, or audio or
computer conferences. (Includes video courses if students physically attending the school also receive the
video course in the same award year.)


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correspondence courses if the sum of telecommunication courses and other correspondence
courses provided by the institution during its latest complete award year was equal to or more
than 50 percent of the total courses provided that year.

During award year 1999-2000, ISU offered more than 3,000 courses each semester to its
students. ISU had 472 semester-based correspondence/telecommunication courses. Of the
15,264 students enrolled during the award year, 2,357 students (about 15 percent) were enrolled
in one or more of the correspondence/telecommunication courses in one or both semesters.
Although ISU is currently well under the 50 percent requirements, both the number of
correspondence/telecommunication courses offered by the institution and the number of students
enrolled in such courses are increasing each year. By not performing the calculation, ISU could
unknowingly exceed the 50 percent limits and, as a result, lose its eligibility to participate in
Title IV programs.

Recommendation

The Chief Operating Officer for Student Financial Assistance should require ISU to:

3.1. Implement policies and procedures for annual calculations of the percentage of
      correspondence/ telecommunication courses offered each award year and the percentage of
      students enrolled in correspondence/telecommunication courses.

ISU’s Comments

ISU stated that policies and procedures would be developed and implemented for an annual
calculation of the percentages.


                                    OTHER MATTERS
Exit Counseling Documentation. Our review of student financial aid files revealed that ISU did
not consistently retain documents to substantiate its compliance with exit counseling
requirements of the Federal Family Education Loan (FFEL) Program. Title 34 CFR
§ 682.604(g) states that an institution is required to conduct exit counseling with each borrower
shortly before the borrower ceases to be at least a half-time student at the institution. Such
counseling can be conducted by electronic means; in-person (either individually or in groups);
and, under certain circumstances, in writing. The regulation requires that institutions maintain
documents substantiating compliance with this section. ISU had procedures for conducting the
required exit counseling, but we were unable to confirm that the procedures were executed, as
intended, due to the lack of documentation in the school records.

ISU’s Comments

ISU stated that it would review its current entrance and exit counseling procedures to be able to
readily substantiate its compliance with the federal regulations.




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                                        BACKGROUND
ISU, located in Terre Haute, Indiana, is a state-supported institution of higher education. ISU
offers bachelor’s and master’s degrees, doctorates in philosophy and psychology and an
educational specialist degree. For the award year ended June 30, 2000, ISU had an enrollment of
about 15,000 students and about 5,300 of the students received Title IV funds. During that
award year, ISU received approximately $4.5 million in Pell Grants and $435,000 in Federal
Supplemental Educational Opportunity Grants. Also, ISU students were approved for
$28 million in FFEL funds. The institution’s 1998 cohort default rate (the most recent rate
available) was 4.4 percent.

The institution is governed by the Indiana State University Board of Trustees and is subject to
oversight by the Indiana Commission for Higher Education. The Commission reviews and
approves degree programs, including programs offered through distance education methods. In
March 1998, the Commission issued policy on delivering degree programs through distance
education methods.

The institution is accredited by the North Central Association of Colleges and Secondary
Schools (NCA), Commission on Institutions of Higher Education. NCA, in collaboration with
eight regional accrediting agencies, developed guidelines for the evaluation of electronically
offered degree and certificate programs. In March 2000, NCA implemented a policy requiring
institutions to obtain the Commission’s approval to extend an institution’s accreditation to degree
programs offered through distance education methods. NCA conducted an on-site reaccreditation
review at ISU from February 29-March 1, 2000. The review included coverage of ISU’s
programs and courses offered through various distance education methods.

ISU offered 18 degree programs and 472 semester-based courses through distance education
methods during school year 1999-2000.

   •     WEB courses (179 courses) can be completed anywhere the student has access to the
         Internet. WEB courses typically include a course syllabus, information on lessons and
         assignments, discussion boards, and links to supplemental material. ISU uses
         CourseInfo, software purchased from Blackboard, Inc, to facilitate delivery of WEB
         courses. The software allows the faculty instructor to review student activity on an
         individual student or class basis. For example, the instructor can track how many times a
         student accessed the course by time of day.

   •     Correspondence courses (177 courses) use printed material that may be supplemented
         with a video or audio tape. Students work independently and submit assignments,
         questions and examinations by mail to ISU. Some courses require proctored
         examinations.

   •     Videotaped courses (17 courses) include a set of videotapes and printed materials. Some
         videotape courses refer the student to Internet sources for supplemental information.

   •     Interactive television courses (99 courses) are offered at more than 300 sites in Indiana.
         The courses are held on-campus and broadcast simultaneously to receiving sites.



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         Receiving sites are located in libraries, public schools, college campuses, hospitals and
         other offices that are equipped to receive transmission through the Indiana Higher
         Education Telecommunications System. The faculty instructor and students at the
         receiving sites can communicate with each other through an audio or audio/video
         connection.

Typically, ISU students taking courses through distance education methods were simultaneously
enrolled in one or more on-campus courses. For award year 1999-2000, we identified only
69 students receiving Title IV who were enrolled solely in courses offered through distance
education.

The ISU’s Division of Lifelong Learning is responsible for overseeing the delivery of distance
education. The Division also offers services to assist faculty in preparing their courses for
distance delivery. The Division staff include instructional designers, web programmers,
computer graphics specialists, multi-media developers and a course editor. To implement a new
distance education course, faculty members complete a Course Development Agreement and
Course Planning Guide, meet and work with instruction designers and developers. According to
Division staff, about one-third of all full-time tenured faculty have attended the Division’s
Course Transformation Academy, a development program designed for faculty members
preparing to use technology in their teaching.

Consortia. ISU participates in a consortium agreement for a Doctoral Degree in Technology
Management with the following institutions: Texas Southern University, University of
Wisconsin-Stout, Central Missouri State University, Bowling Green State University, and North
Carolina Agricultural and Technical State University. ISU is the designated degree granting
university for this agreement and provides the necessary support for admissions, record
maintenance and contact with students.

ISU is also part of the Indiana Partnership for Statewide Education (IPSE). IPSE is a not-for-
profit consortium of 20 Indiana universities and colleges that cooperatively offer distance
education courses. Students select a home institution that processes the student’s enrollment and
financial aid, maintains records and issues the degree.

Learning Anytime Anywhere Partnership Grant. ISU’s Division of Lifelong Learning is the
recipient of a $1.15 million Learning Anytime Anywhere Partnership Grant from the
U.S. Department of Education. The grant is being used to develop a virtual instructional design
application that provides faculty at various institutions with anytime, anyplace access to the
information, documentation, training, models and interactive support necessary to design quality
asynchronous online courses.




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                    PURPOSE, SCOPE AND METHODOLOGY
The audit objective was to evaluate whether ISU’s policies and procedures, which are used for
delivering educational programs and courses through distance education methods, ensure that
Higher Education Act, Title IV Student Financial Assistance Programs requirements are met by
the institution and its students.

To accomplish our objective, we identified and reviewed applicable Title IV requirements. We
reviewed ISU’s policies and procedures and interviewed ISU management and staff to identify
policies, procedures and practices used to record, process and account for students enrolled in
courses delivered through distance education methods. We interviewed ISU’s managers and staff
in enrollment services, admissions, registrar office, student financial aid, bursar operations,
financial accounting, grants and contracts, information technology and institutional research.

We also interviewed management and staff in ISU’s Division of Lifelong Learning to gain an
understanding of the policies and procedures specific to distance education programs, including
course design, approval and delivery; faculty and administrative support; and student services.
We interviewed faculty involved in the delivery of distance education programs and courses.
We also interviewed students enrolled in such programs and courses to obtain their viewpoint.

We visited the institution’s accrediting agency, NCA, in Chicago, Illinois from September 13-15,
2000. We interviewed NCA staff to gain an understanding about their standards, procedures and
practices related to reviews of distance education programs and courses. We reviewed NCA’s
report of its site visit to ISU from February 29-March 1, 2000, the most recent NCA self-study
report of ISU and NCA’s accreditation handbook.

We reviewed rules, guidelines and approval requirements of the Indiana Higher Education
Commission, which is responsible for approving programs offered by institutions in Indiana. We
reviewed the institution’s audit report for the year ended June 30, 1999. We also interviewed the
auditor at the Indiana State Board of Accounts responsible for conducting the audit in accordance
with requirements of Office of Management and Budget Circular A-133.

To achieve our audit objective, we relied on computer-processed data extracted by ISU staff
from the institution’s database to identify the universe of students enrolled during award year
1999-2000. To evaluate the reliability of the computer-processed data, we reviewed
documentation explaining the system and interviewed ISU staff to identify the subsystems,
tables, data elements and codes relevant to our review. We reviewed the job query language
used by ISU staff to prepare the extract file to confirm that ISU had provided us with the
requested data for all students. Nothing came to our attention as a result of our limited review
that caused us to doubt whether the extract file reflected the students enrolled at ISU during
award year 1999-2000.

From the extract file, we identified 922 students enrolled in one or more courses delivered
through distance education methods who received Title IV funds. From these 922 students, we
judgmentally selected 50 students for whom we reviewed school records to evaluate whether
ISU’s policies and procedures were adequate to ensure that students enrolled in program and




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courses offered through distance education methods met Title IV requirements. We used a
judgmental selection process to ensure that our review covered a variety of delivery methods.

Our audit work covered ISU’s policies, procedures and reports for award year 1999-2000. We
conducted our fieldwork from August to November 2000, which included four weeks on site at
ISU. We held our exit briefing with ISU on November 2, 2000. Our audit was performed in
accordance with generally accepted government auditing standards appropriate to the scope of
the review described above.


                  STATEMENT ON MANAGEMENT CONTROLS
As part of our review, we assessed the system of management controls, policies, procedures and
practices applicable to ISU’s administration of Title IV programs. Our assessment was used to
determine whether ISU policies and procedures, which were used for delivering educational
programs and courses through distance education methods, provided a reasonable level of
assurance that the institution and its students met selected Title IV requirements.

For the purpose of this report, we categorized the significant controls as follows:

   •     Oversight of institutional and program eligibility
   •     Student recruitment
   •     Student eligibility
   •     Award and disbursement of Title IV funds
   •     Refunds
   •     Exit Counseling

Because of inherent limitations, a study and evaluation made for the limited purpose described
above would not necessarily disclose all material weaknesses in the management controls.
However, our assessment disclosed management control weaknesses in determining student
enrollment status, the timing of Pell Grant disbursements and adherence to institutional limits for
correspondence course and students. These weaknesses are fully discussed in the Audit Results
section of this report.

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 official, who
will consider them before taking final action on the audit:

                                Greg Woods
                                Chief Operating Officer
                                Student Financial Assistance
                                U.S. Department of Education
                                ROB MS-5132, Room 4004
                                7th and D Streets, SW
                                Washington, DC 20202




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                            REPORT DISTRIBUTION LIST
                           CONTROL NO. ED-OIG/A09-A0021

                                                           No. of
                                                           Copies
Auditee
      Dr. Lloyd Benjamin III                                   1
      President
      Indiana State University
      Terre Haute, Indiana 47809


ED Action Official
      Greg Woods, Chief Operating Officer                      1
      Student Financial Assistance

Other ED Officials/Staff
      Terry Abbott, Chief of Staff                             1
      Office of the Secretary

       Thomas P. Skelly, Director                              1
       Budget Service
       Office of the Under Secretary


Other ED Officials/Staff (electronic copy)
      Office of Public Affairs                                 1

       Deputy Secretary of Education                           1

       General Manager for Schools                             1
       Student Financial Assistance

       Team Leader                                             1
       Case Management and Oversight Team
       Student Financial Assistance


Others (electronic copy)

       University Supervisor                                   1
       Indiana State Board of Accounts

       Executive Director                                      1
       North Central Association of Colleges and Schools
       Commission on Institutions of Higher Education