(a) A penalty shall be paid on any refund not completed 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 completed.
(b) Any penalty assessed on a school's late payment of student refunds shall be disbursed in the following order of priority:
  (1) to the student's account at a lending institution for the balance of principal and interest on the student loan;
  (2) to the student for tuition and fees paid directly by the student;
  (3) to a Board for tuition and fees paid by the Board; and
  (4) to the tuition trust account for any remaining balance of assessed penalty.
(c) If the Agency 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 agreed-upon procedures engagement conducted by an independent CPA. The CPA shall examine all files for students who did not complete a course of study, to determine compliance with the most restrictive of:
  (1) the Act;
  (2) this chapter; or
  (3) the school catalog current on the date of the student's enrollment.
(d) An opinion letter shall accompany a schedule of student refunds due, disclosing the following information for the four years prior to the date of the Agency's request:
  (1) student information, including name, address, and Social Security number;
  (2) pertinent dates, including recorded last date of attendance, date of termination, and, if necessary, recalculated last date of attendance;
  (3) recorded refund information, including amount of refund with principal, penalty, and any balance due stated separately; payee; date and check number of payment if payment has been made; any of the same categories of information resulting from recalculations; and
  (4) other information requested by the Agency to demonstrate compliance.

Source Note: The provisions of this §807.264 adopted to be effective August 28, 2006, 31 TexReg 6803; amended to be effective January 23, 2012, 37 TexReg 200; amended to be effective November 14, 2016, 41 TexReg 9020