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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Higher Education Services Corporation
Oversight of the STEM Incentive Program


Issued: November 28, 2018
Link to full audit report 2017-S-75
Link to 90-day response

Purpose
To determine if the Higher Education Services Corporation (HESC) is effectively monitoring the Science, Technology, Engineering, and Mathematics (STEM) Incentive Program (Program) to ensure recipients are in compliance with the Program rules and regulations, and whether HESC has only made payments on behalf of recipients who are in compliance with Program regulations. The audit covered the period April 1, 2014 to July 23, 2018.

Background
HESC administers 27 State scholarship and loan forgiveness programs (including the Program). HESC’s mission includes ensuring that students have access to a college education and an understanding of their financial aid options. The Program provides a full tuition scholarship to State high school graduates who pursue a STEM degree and agree to work in a STEM field in the State for five years after graduation. During the scope of our audit, recipients could attend any State University of New York or City University of New York two-year or four-year college or statutory colleges at Cornell University and Alfred University. Starting with the 2014-15 academic year, awards cover tuition equal to the lesser of the amount charged to State residents or actual tuition charged. As of January 23, 2018, HESC had paid 2,331 recipients $23,255,830 in Program awards.

Recipients must meet multiple eligibility requirements for the award, both before and after receiving it. Key eligibility requirements include:

    • Graduating in the top 10 percent of their class from a State high school;
    • Enrolling in a HESC-approved undergraduate STEM program;
    • Maintaining a cumulative undergraduate grade point average of 2.5 or higher; and
    • Working in a HESC-approved STEM field and maintaining residency in the State for five years after graduation.

    Recipients who fail to meet Program requirements will have their awards converted into ten-year student loans with interest.

Key Findings

  • HESC did not always ensure that applicants met Program eligibility requirements. We tested a random sample of 271 award recipients at the three universities that received the most Program payments (SUNY Binghamton, SUNY Buffalo, and SUNY Stony Brook). We found that HESC made $81,198 in payments on behalf of 20 recipients who did not meet the Program requirements while in college.
  • HESC’s STEM Compliance Procedures included a policy to pro-rate loans for any recipients who do not fulfill work and residency requirements. However, HESC regulations restrict the policy of pro-rating loans to instances of extreme hardship. In response to our findings, HESC changed that policy to be consistent with their regulations. HESC officials stated that the policy previously included in their procedures was an oversight, and across-the-board pro-rating was not their intent. Subsequent to our audit, the regulations were amended to broaden the circumstances under which loans could be pro-rated.
  • HESC’s data systems are somewhat antiquated and restrictive, limiting their usefulness to HESC officials to effectively monitor and track Program compliance and award repayments.

Key Recommendations

  • Take steps to strengthen oversight of Program recipient eligibility requirements and ensure receipt of required documentation.
  • Review the $81,198 in ineligible award payments and make recoveries, as appropriate.
  • Take steps to ensure that HESC policies and procedures comply with the regulations governing the Program.
  • Take steps to strengthen the database systems used to administer the Program.

Other Related Audits/Reports of Interest
None

 


State Government Accountability Contact Information:
Audit Director: Stephen Goss
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236