Federal Government Blocks Free University Program at Eastern Gateway Community College

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Diving Brief:

  • Eastern Gateway Community College, a public institution in Ohio, is advising students who enroll in its Free College Benefit program that they should not plan to receive funding from federal Pell Grants after the U.S. Department of Education reported concerns.
  • The Ed Department said in a letter dated July 18 that the program violates federal law by charging more to students who receive federal Title IV financial aid than to students who do not.
  • Eastern Gateway objected to the findings and said in a press release Wednesday that annual Title IV compliance audits have not found any issues for the past four years.

Overview of the dive:

East Gate touted its free college program as a last dollar scholarship made possible through a partnership with local and national unions. More than 75,000 students have participated in the initiative since 2015, saving $175 million, according to the college.

But the Ed department found problems with the way the program works. Students who receive Pell grants, which go to students with high financial need, have those federal financial aid dollars credited to their bills, according to the department’s letter. State dollars are also credited on student bills. The remaining balances are then credited with a scholarship, which reduces the fees students pay to zero. The college also reduces fees to zero for students who do not receive funding from Pell Grants or state aid programs.

Records show scholarship funding comes from outside entities, according to the Department of Education. But he found that outside entities provide virtually no funding.

In other words, the ministry said, the community college is waiving all non-publicly funded fees and giving the impression that students are being supported by outside groups. This would mean that students who receive Pell funding are billed — with the government footing the bill — while students who don’t receive money from the program pay nothing.

“It should be noted that under the Free College Benefit program, students with lower levels of need have higher ‘discharge’ and ultimately lower fees than the most needy Pell students,” the letter from the Department of education. “The end result of implementing the Free College Benefit Program is that the Pell Grant Program and State Grants fund tuition for students whose income makes them ineligible for either.”

The college disagrees with this analysis, its president, Michael Geoghegan, said in a statement.

“Until this issue is resolved, which we hope will be soon, we will continue to enroll students and notify new and prospective students of the situation,” Geoghegan said.

Eastern Gateway is telling students who have enrolled or plan to enroll for the fall that they shouldn’t expect Pell funding while the issue is pending.

“Free college is closed to enrollment for the fall 2022 semester,” the college website says. “Information on future conditions will be shared as it becomes available.”

The college is working to resolve the issue with the Department of Education and is also turning to federal lawmakers for help.

Enrollment at Eastern Gateway has increased since the tuition-free university program began in 2015. Enrollment has grown from about 5,500 students in fall 2016 to more than 42,500 in fall 2021, according to court documents filed in June. by the Student Resource Center, the online program manager the college hired to manage the program.

Eastern Gateway and Student Resource Center are involved in a lawsuit for breach of contract.

The college argued with the Department of Education that states, including Tennessee and California, offered last-dollar scholarship programs similar to its own. But the programs he cited are all funded by a real source of revenue, such as foundations or state funding, the ministry replied.

“In neither program are fees for non-Title IV students waived entirely, resulting in Title IV students being charged and not non-Title IV students, an outcome that is prohibited under the Title IV Statute. “, said the Department of Education in its letter.

The Department of Education also said Eastern Gateway was in “a very precarious financial position” as the tuition-free university program limited the money it had available to educate students and forced cuts in academic and operating expenses.

Colleges and programs that work with OPMs come under increased scrutiny, especially after a report released earlier this year by a congressional watchdog said the Ed Department should step up its oversight of the relationship.

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