1. (a) A penalty shall be paid on any refund not consummated in a timely manner as required by the Act. The penalty assessment shall begin on the first day following the expiration of the statutorily defined refund period and end on the day preceding the date the refund is consummated.

2. (b) Penalties assessed on late refunds for grants shall be paid to the tuition protection fund if the amount is $15 or less. Any other penalty assessed on a school's late payment of student refunds shall be disbursed in the following order of priority:

   1. (1) to the student's account at a lending institution for the balance of principal and interest on the student loan;
   2. (2) to the student for tuition and fees paid directly by the student; and
   3. (3) to the tuition protection fund for any remaining balance of assessed penalty.

3. (c) If the Commission determines that the method used by the school to calculate refunds is in error or the school does not routinely pay refunds within the time required by the Act, the school shall submit an audited report conducted by an accountant of the refunds due former students that includes any penalty due as specified in the Act. An audit opinion letter shall accompany a schedule of student refunds due, which discloses the following information for the four years prior to the date of the Commission's request:

   1. (1) student information, including name, address, and social security number;
   2. (2) pertinent dates, including last date of attendance and date of termination; and
   3. (3) refund information, including amount of refund with principal, penalty, and any balance due separately stated, payee, and date and check number of payment if payment has been made.

Source Note:The provisions of this §807.194 adopted to be effective August 16, 1998, 23 TexReg 8479.