Audit reveals student loan delinquency at state agency

Wednesday, May 11, 2005 | 11:09 a.m.

CARSON CITY -- A state commission that loans money to students to attend out-of-state professional colleges and universities, has failed to collect $600,000 in delinquent loans, a legislative audit says.

The audit, released Tuesday, said the Western Interstate Commission for Higher Education did not keep sufficient documents regarding the awarding of stipends or loans.

"As of June 30, 2004, WICHE had 35 delinquent loans totaling about $600,000 or 28 percent of the total dollars outstanding," the examination said. "In most cases, participants had not made payments on these loans for several years."

The students, with WICHE's help, were enrolled in dentistry, nursing , pharmacy, physical therapy, optometry and veterinary medicine programs out-of-state.

The files of the commission show that no collection action was taken on 18 of the loans for more than two years, the audit said.

The agency is governed by three commissioners and has a staff of three. It's budget for fiscal 2004 was $1.6 million.

Ron Sparks, executive director of the commission, said a tracking system is now in place together with a monthly delinquent chart to collect the loans. It will also refer some of these cases to the state Attorney General's Office for further collection efforts.

The Nevada commission is part of a compact of western states that allows students to attend professional schools not available in Nevada. The commission also provides loans to these students to help pay tuition to these out-of-state schools.

In some cases, students must agree to return to Nevada and practice in rural areas for two years as part of the loan agreement, and sometimes the debts are waived.

Audit Supervisor Jane Bailey said the commission writes letters or refers the cases to the attorney general's office that writes letters to collect these delinquent loans. But it has not used collection agencies or liens or garnishments.

An example of the weaknesses of the system could be seen in the case of one person who owed $7,000 in two loans and did not pay for three years, Bailey said. At the same time, accounting records indicated that another state agency paid that same person $18,000 for contracted services.

"If WICHE had taken advantage of the offset program, these two loans could have been paid," said Bailey.

The audit said the staff should provide the three commissioners with periodic information on its loan collection efforts. "The commission need this information to help it meet its statutory and fiduciary responsibilities, provide oversight and guidance to the staff and keep updated on potential issues facing the program," the examination said.

It also found the commission has not updated its policies and procedures manual in more than 10 years. Several policies and procedures contain handwritten changes and some are on post-it notes, the audit said.

Sparks said the records and policies have been updated and other corrections have been made to the findings of the audit.