Financial aid fiasco to cost CSN about $1.7 million

By Paul Takahashi

Published Thursday, Oct. 3, 2013 | 6:05 p.m.

Updated Friday, Oct. 4, 2013 | 12:34 p.m.

CSN’s financial aid errors will cost the community college about $1.66 million, according to new estimates released Thursday.

In March, the U.S. Department of Education requested the College of Southern Nevada to verify its student financial aid figures after finding red flags in its annual financial aid audit for the 2011-12 and 2012-13 school years. CSN, founded in 1971, is Nevada’s largest higher education institution, serving nearly 40,000 students.

An investigation by a third-party analyst found several human, “processing errors,” which led to CSN overpaying and underpaying federal financial aid money to thousands of students over the past two school years. The average federal financial aid award at CSN is about $2,700 per student.

The community college disclosed the errors to the public in late August, although at that time, officials did not know the number of impacted students and how much federal money was mistakenly disbursed.

On Thursday, after financial aid analysts ProEducation Solutions verified CSN’s student records, community college officials disclosed the extent of its financial aid errors:

CSN disbursed $133 million in financial aid to 49,366 students over the past two school years. The Education Department asked CSN to verify the results of about 27 percent of those students, because of concerns they had about their financial aid audit figures.

It’s typical for the Education Department to request an institution the size of CSN to verify about 30 percent of its students’ financial aid records, officials said.

With the help of ProEducation Solutions, CSN reviewed 13,348 students’ financial aid records and found that about half of them — 6,279 student records — had inaccuracies, which ranged from simple file errors to those that affected how much financial aid money students received.

In the case for 2,718 students, CSN's errors led to over-awards or under-awards in financial aid. This represented about 6 percent of all students receiving financial aid at CSN.

“These errors are unacceptable and must be addressed,” CSN President Michael Richards said in a statement. “It is critical for CSN to restore confidence in the integrity of the financial aid awards that CSN students receive and full faith in our processes and personnel.”

Since late August, when the financial aid errors were disclosed, the college has been working feverishly to tackle its financial aid problems, officials said.

The financial aid department, with the assistance of business and finance staff, has been working to correct student records. In the wake of the financial aid fiasco, two of CSN's top administrators overseeing financial aid have resigned; one complaining of being overworked to the detriment of his health as a result of having to clean up the financial aid mess.

CSN brought on Victoria Goeke, a senior consultant with Evans Consulting Group, as its interim financial aid director after Brad Honious, CSN's associate vice president of financial aid, resigned two weeks ago. A hiring committee is now working to fill vacancies in CSN’s financial aid department.

The college has been flooded with students concerned about their financial aid. A special group of staff has been working with impacted students since Sept. 6 to iron out any issues, concerns or questions they had, officials said.

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

Instead, CSN will be held liable to pay back the overawards to the Education Department. The $1.66 million repayment estimate, which still needs to be verified and accepted by the Education Department, represents about 1 percent of the total federal financial aid CSN disbursed over the past two years.

The college intends to repay this money using part of its $2.5 million in “institutional reserves” from auxiliary services, such as revenues from vending machines. State funds and student tuition and fees will not be used, and CSN has requested a multiyear repayment process, officials said.

In a smaller number of cases, CSN under-awarded federal financial aid to students. CSN has processed almost all of these corrections and distributed appropriate funds to affected students. CSN will be reimbursed by the federal government for the corrected awards.

To ensure accurate financial aid awards for this school year, ProEducation Solutions will continue to verify CSN’s financial aid figures, officials said. The analyst’s verification process costed $7.50 per record, or a total of $40,000 to $45,000 for each school year verified.

In addition, CSN hired Evans Consulting Group to perform a comprehensive review of the college’s financial aid department, beginning Oct. 14.

Evans’ assessments will include a complete examination of financial aid policies and procedures, customer relations and training. CSN’s contract with Evans for the top-to-bottom structural review will cost about $36,000.

“We will evaluate all of Evans’ recommendations immediately upon receiving them, and secure resources to move those recommendations forward,” Richards said.