NASFAA Mention: Missing Federal Aid Payments

"Argosy University has failed to distribute nearly $16.3 million in federal aid to thousands of its students. And chances are the students won’t get the money, according to financial aid and education experts," Inside Higher Ed reports.

"The unusual problem escalated last week, when the U.S. Department of Education suspended Argosy and some Art Institutes campuses, which are owned by the nonprofit Dream Center Education Holdings, from receiving federal aid. The department also denied Argosy’s request to change its tax status to nonprofit.

... In the letter explaining why it was cutting off federal funds to Dream Center, the Education Department said Argosy has failed to meet its financial responsibility to students.

'Not only did Argosy fail to pay credit balances prior to submitting its request for payment from the department, even after Argosy received the funds, it still failed to pay those credit balances,' the department said.

Dream Center filed for a court-appointed receiver in January, because the missionary organization was facing insolvency and wanted to sell its campuses to keep them open.

Argosy received nearly $13 million from the department in federal financial aid between January and Feb. 5. Instead of ensuring credit balances were paid to students, the institution paid nearly $4.3 million to its staff and about $2.2 million to vendors and used roughly $1.8 million for payroll expenses. Another $3.8 million was maintained in the receivership account.

... Financial aid experts said while the department’s moves with Argosy are reminiscent of Corinthian Colleges' collapse in 2015, denying students’ their financial aid refunds is unique.

'This is a very unusual situation,' said Justin Draeger, president and chief executive officer of the National Association of Student Financial Aid Administrators. 'I’ve never seen this sort of thing where funds are moving around in a school with no explanation of where they are, and they haven’t been accounted for correctly.'

Also unusual are the department’s actions in its attempt to prevent Argosy from shutting down the way Corinthian did.

'A lot of things here just don’t make sense,' said Mark Kantrowitz, an expert on student aid. 'The U.S. Department of Education should really know if an institution is financially viable and what kind of pressure can be put on an institution before it shuts down.'"

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 3/4/2019

View Desktop Version