The U.S. Division of Schooling has lower off federal pupil monetary assist to Union Institute & College and can wonderful it $4.3 million over a number of allegations, together with that the personal nonprofit school illegally took in additional assist than it was entitled.
The Ohio establishment repeatedly “misused Title IV funds to the detriment of its college students, the division and taxpayers,” the U.S. Division of Schooling wrote in a letter earlier this month.
The division is fining the college for a number of violations of federal regulation, it wrote. The company accused Union Institute of taking about $43,500 extra in monetary assist than it wanted, most of which it has not paid again. It additionally did not refund college students greater than $753,000 in assist, the Schooling Division mentioned.
Slicing the establishment off from federal cash may spell its demise. Union Institute has maintained it is not going to shut, regardless of repeatedly suspending its fall courses and going through a number of lawsuits over alleged unpaid hire and payroll.
Union Institute didn’t instantly reply to a request for remark Tuesday.
Issues emerge
Union Institute staff and college students have regularly raised issues concerning the college this yr. It has lots of the hallmarks of an establishment teetering on closure, together with declining enrollment, associated monetary points and mounting authorized troubles.
Its headcount plummeted from 1,666 college students in fall 2012 to 787 in fall 2022, based on federal information. Declining tuition contributed to the college working at a deficit in each fiscal yr since 2018, publicly accessible tax paperwork present.
The college’s monetary struggles grew to become extra obvious this yr when staff began complaining publicly about Union Institute lacking payroll, though this concern reportedly started as early as December 2022.
The skipped paychecks prompted questions concerning the establishment’s monetary place, and although Union Institute President Karen Schuster Webb repeatedly reassured employees the college would treatment the state of affairs, it didn’t.
In April, a Union Institute worker filed a lawsuit in federal courtroom over the missed pay. That class-action case is ongoing.
The state of affairs worsens
Union Institute’s monetary troubles broaden far past missed pay, because the Schooling Division’s letter revealed.
The college hasn’t paid staff since mid-August, based on the division.
Additional, the company mentioned that Union Institute had misused federal pupil assist, earmarking a few of that cash to cowl different bills.
Below federal regulation, Union Institute wanted to pay college students or dad and mom any surplus federal monetary assist after accounting for the price of tuition and different charges.
However the Schooling Division mentioned the college didn’t do that, as an alternative redirecting these credit to pay for the establishment’s personal bills.
The college recognized greater than $753,000 in credit owed to 157 college students, based on the Schooling Division. The division mentioned that on the finish of August, the college defined it couldn’t refund that cash as a result of it had been held in an account {that a} financial institution subsequently drained to repay the establishment’s delinquent bank cards.
However the Schooling Division mentioned it may solely account for $200,000 of these owed credit, and that the college has not defined the place it stashed the remaining $553,000.
The Schooling Division mentioned that in early September, a Union Institute official advised it many of the college accounts had been empty.
The company alleged that Union Institute additionally illegally took different federal monetary assist to satisfy its bills. On 5 events via June and July, the college drew 1000’s of {dollars} greater than it wanted in monetary assist from the federal authorities, based on the letter.
Faculties can draw extra federal assist as they want it, however should be capable of show they’re disbursing it to college students — Union Institute by no means did, the letter mentioned.
The Schooling Division contacted the college in September, demanding it repay the roughly $43,500 by Oct. 5.
Although college officers agreed to take action, they’ve up to now solely despatched solely $5,000 of that cash, the Schooling Division mentioned.
The college “can’t be trusted to manage the Title IV applications in accordance with the Division’s laws,” the division wrote.
It has given Union Institute till Nov. 27 to enchantment the wonderful and cancellation of its Title IV entry.
Different stress
Months earlier than the wonderful, in August, the Schooling Division had basically iced Union Institute’s entry to federal funds via a sanction often known as heightened money monitoring 2.
This meant the Schooling Division wouldn’t advance the college any monetary assist — the establishment wanted to pay out of pocket after which search division reimbursement.
Due to that new construction, the college hasn’t obtained any federal assist since August.
And in September, the Schooling Division mandated the college put up a $12 million letter of credit score by mid-October to proceed accessing federal funds.
The Schooling Division hadn’t obtained that as of mid-November.
Additional compounding Union Institute’s issues was its accreditor, the Increased Studying Fee. In September, HLC deemed it a financially distressed establishment.
The label meant Union Institute remained accredited, however it signaled HLC had “severe issues about its useful resource base to assist its academic applications.”
HLC officers visited the campus in October to find out about its monetary state of affairs.
The accreditor had demanded the college develop teach-out agreements that may allow college students to switch elsewhere, based on the Schooling Division, however it “did not well timed submit that plan.” HLC additionally advised the Schooling Division that Union Institute was behind on its membership dues and different bills, based on the letter.
A choose this month additionally approved an eviction of Union Institute at its facility within the Cincinnati neighborhood of Walnut Hills. The constructing’s landlord alleged Union Institute owes lots of of 1000’s of {dollars} in again hire.
