Education Department ramps up oversight of Eastern Gateway Community College

Dive Brief:

• The U.S. Department of Education put new restrictions on Eastern Gateway Community College’s ability to receive federal funding, it said Tuesday, ramping up oversight of the Ohio institution’s finances after a public dispute broke out over a free college program.
• Eastern Gateway is now on the on the Heightened Cash Monitoring 2 list, also known as HCM2. Institutions on that list can no longer receive Title IV student financial aid funds by requesting them upfront from the Education Department before disbursing them. Instead, they must front federal financial aid disbursements from their own institutional accounts and then request reimbursement from the government.
• The Education Department placed Eastern Gateway on HCM2 “to ensure that there is proper documentation prior to the disbursement of federal financial aid,” according to a statement. An Eastern Gateway spokesperson did not immediately respond to a request for comment Tuesday afternoon.

Dive Insight:

In July, the Education Department and Eastern Gateway publicly disagreed about a much-touted free college program at the institution. Eastern Gateway called the program a last-dollar initiative built on partnerships with unions, but federal regulators suggested it charged the government for students receiving Pell Grants while not charging non-Pell students.

Last-dollar programs tap other sources of financial aid, then pay remaining parts of students’ educational costs. Federal Pell Grants go to students who demonstrate a high level of financial need.

In a letter, the Education Department alleged students who received Pell Grants and state financial aid funding had that money applied to their bills, then remaining charges were zeroed out by scholarships. Students who didn’t receive public financial aid also had their balances cut to zero. But the department said outside entities actually provided little scholarship funding, in contrast to how the college said the program operated.

Michael Geoghegan, the college’s president, has disputed that analysis. But the college nonetheless said July 27 that it was not accepting new students into the free college program and would only disburse Pell Grant funding to students who had already enrolled as it sought more answers from the department.

Eastern Gateway has pointed to the free college program, started in 2015, as a key factor in massive enrollment growth. In 2015-16, the institution’s headcount was 4,808, according to financial documents. That grew to 40,637 by 2019-20. 

Federal data shows the college enrolled more than 45,000 students last year, with 70% part time and 95% in distance education.

Tuesday’s action doesn’t affect which students are eligible to attend Eastern Gateway, according to the Education Department.

“Under this status the school must still ensure students get their financial aid in a timely manner,” the Education Department said in a statement. “This is a critical and necessary step given serious compliance concerns at EGCC. We will continue to stay in close contact with EGCC to ensure full compliance regarding their treatment of students eligible to receive Federal Pell Grants.”

Colleges can be placed on heightened cash monitoring lists for several reasons, according to the Education Department. They include problems with accreditation, financial statements and audits, as well as “denial of re-certifications, concern around the school’s administrative capabilities, concern around a school’s financial responsibility, and possibly severe findings uncovered during a program review.”