The objectives of our audit were to determine whether the University of Southern California (USC) (1) applied and documented its use of professional judgment, including dependency override, in accordance with sections 479A and 480(d) of the Higher Education Act of 1965, as amended (HEA), and (2) reported its use of professional judgment, including dependency override, in accordance with the Federal Student Aid Handbook, Application and Verification Guide. This was the third in a series of audits on this subject. Prior two audits can be found here.
We found that USC did not apply professional judgment in accordance with section 479A of the HEA for 75 of the 108 students included in our sample of students for whom the school applied professional judgment other than dependency override for award year 2019–2020 or award year 2020–2021. Additionally, USC did not adequately document a financial aid administrator’s use of dependency override for 8 of the 30 students included in our sample of students for whom the school applied dependency override for award year 2019–2020 or award year 2020–2021. Finally, although we found that USC generally reported its use of professional judgment, including dependency override, to the Department’s Central Processing System in accordance with the Application and Verification Guide, it also reported to the Department’s Central Processing System that it applied professional judgment when its financial assistance records did not corroborate that professional judgment had been applied for Title IV purposes.
We made 6 recommendations, including that FSA require USC to calculate and return to the Department improper Title IV payments made to the students included in our sample for whom it did not apply professional judgment in accordance with section 479A of the HEA. We also recommend that USC be required to provide additional records that adequately document its determinations of independence for the students included in our sample or return any improperly awarded Title IV payments to the Department. Additionally, we recommend that FSA require USC to review its records for the students for whom the school applied professional judgment, including dependency override, but were not included in our samples; identify the students for whom it improperly applied or inadequately documented its use of professional judgment; provide its records for those students to FSA; and return any improperly disbursed Title IV funds to the Department. Finally, we recommend that USC be required to implement procedures for confirming that its student information system data are corroborated by its financial assistance records before reporting the use of professional judgment to the Department’s Central Processing System.
Oversight and Monitoring – Federal Student Aid
See other OIG reports on professional judgment.