Online University Awarded Nearly $1-Million in Federal Funds to Ineligible Students, Audit Finds

TUI University, formerly known as Touro University International, awarded nearly $1-million in federal loans and grants to students who did not qualify for the funds or had withdrawn from the university, says an audit report from the U.S. Department of Education’s Office of Inspector General.

The for-profit online university awarded a total of $8.6-million in bank-based federal student loans and Pell Grants from the fall of 2007 to spring of 2008, the report says. Auditors estimated that $923,379 of that total was awarded to ineligible students, a finding based on a survey of 98 of the 963 students or former students who received federal aid during that period.

The report recommends that the Education Department require the university to pay back much of the money and review all federal aid distributed to students since October 16, 2007.

TUI’s president and chief executive, Kenneth J. Sobaski, says the university already completed a full review of the funds, but he declined to comment on the results because Education Department officials have not yet seen them.

Mr. Sobaski, who became president three weeks ago, disputes the inspector general’s findings and said the university will work with Education Department officials in the coming months to resolve their disagreements.

"The university," he said in a written statement, "believes that it has properly accounted for all of its federal student-financial-aid funds, is taking steps to resolve issues raised in the [inspector general’s] report, and does not anticipate" that there will be "any significant repayment liability or adverse impact on the institution upon resolution of this matter."

TUI University, which had been part of the nonprofit Touro College, was sold in 2007 for $190-million to Summit Partners, a private-equity firm in California. The inspector general’s report reviewed university procedures since the sale.

According to the report, some TUI students paid for their online courses with federally subsidized student loans issued by banks through the university. Before processing the loans, financial-aid officers at TUI checked to make sure the students were listed in the university’s database as enrolled. But in many cases, the report says, the students had withdrawn without providing formal notice to the university.

The report recommends that the Education Department require TUI to develop better procedures for tracking its students.

The report also says that TUI offered tuition discounts to government employees and to California residents, but that it did not factor those discounts into its equation for determining the students’ cost of attendance, a figure the federal government uses when deciding how much federal aid a student should be awarded.

In an official response included in the report, TUI says the percentage of students who withdrew from their courses was substantially higher in the inspector general’s 98-person survey sample than in the overall student population. The response says that TUI has already revised its withdrawal procedures. (Chronicle of Higher Education)

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