The US Department of Education told Eastern Gateway Community College to stop enrolling students in its unusual free online college program for union members, saying it violated federal financial aid rules using Pell Grant funds from some students to essentially subsidize the enrollment of other students who do not qualify for federal aid.
College officials disputed the characterization of the department and warned that freezing the program weeks before the start of a new term could disenfranchise nearly 25,000 unionized students and “seriously jeopardize the future of the ‘EGCC and its ability to operate’.
The Free College Benefit Program at Eastern Gateway Community College promises Members of the American Federation of State, County, and Municipal Employees and their families have the opportunity to earn a college degree “without tuition, fees, or books after any federal or employer grants have been applied.” The school charges tuition, fees, and books, although grants or scholarships ensure that students do not pay. The union program has increased enrollment at Eastern Gateway to nearly 47,000 students, nearly all of whom are not from Ohio, and has raised questions from regulators about the college’s unusual partnership with an outside vendor and its finance.
Only students with exceptional financial need are eligible for federal Pell Grants, which provide up to $6,895 per year in educational assistance. Under Eastern Gateway’s Free College Benefit scheme, the Department of Education determined that the college charged Pell-eligible students the full amount of their grants, but nothing more. The college has also reduced bills for non-Pell-eligible students to zero, recording waivers as external scholarships, but essentially using excess Pell funds to subsidize the education of these learners.
The Department of Education said in its July 18 letter that by charging students it determined to be in less financial need than their Pell-eligible peers, Eastern Gateway violated federal guidelines on education. ‘financial aid.
In a letter to Education Department officials on Tuesday, EGCC President Michael Geoghegan challenged the department’s position that non-Pell students whose education is subsidized are necessarily less affluent than their eligible peers. Pel. Students are not eligible for Pell grants for many reasons, he wrote, including “lack of personal financial information, immigration status, last minute changes in plans or other factors “.
He claimed that the scheme “simply ensures that all students can attend university for free, regardless of their Pell eligibility”.
The financial aid issues raised by the Department of Education are the latest developments surrounding the Eastern Gateway program, which has produced “explosive growth” in the college’s online programs. But it caught the eye because it was delivered in partnership with the Student Resource Center, a for-profit online program manager. Additionally, some have expressed concern that the college has hired too few faculty and staff to support enrollment and has insufficient quality controls in place to ensure a high-quality education.
Eastern Gateway’s accreditor, the Higher Learning Commission, placed the college on probation in November 2021 for failing to provide a “high quality educational experience for students”, and the Department of Education said in January that he would investigate the program’s use of financial aid, resulting in the letter this week.
During this time, the relationship between Eastern Gateway and its for-profit partner evolved.
In May, the EGCC accused the Student Resource Center of violating its collaboration agreement by firing its then-CEO and other top officials. Geoghegan and former CEO Michael Perik had known each other for years after working together at another community college in Ohio.
In June, the Student Resource Center sued Eastern Gateway for breaking their collaboration agreement and allegedly courting some of the unions to work directly with the college to “develop, deliver and market online courses” to union members and professional associations. Last week, a federal judge issued a preliminary injunction preventing the college from backing out of its deal with the company. The stakes are high, as 95% of the Student Resource Center’s revenue comes from collaboration, according to the lawsuit.
Meanwhile, in June, the Student Resource Center’s current owners, Sterling Small Market Education Fund and SRC Intermediate Holdings, sued Perik and other former SRC executives, alleging that in the process of selling their business to Sterling in the spring last, they had deliberately failed. disclose that the Eastern Gateway program was under review by its accrediting body.
The owners said they were caught off guard when, months later, the accreditation board placed the school on probation. The probation, according to the lawsuit, undermined the Student Resource Center’s “ability to fulfill its educational mission and impact.”
The Free College Benefit program website now states, “The Free College program has been suspended as our higher education partners address regulatory compliance issues related to the program. [The union] and its higher education partners do not agree with this determination and discussions are ongoing. However, until the Ministry of Education changes its mind, the program cannot be offered in its current form.