The president of ACT College, a for-profit higher education provider shut down last week for alleged federal aid violations, says the institution never intentionally withheld aid dollars from students.
The Northern Virginia college closed its three campuses after the U.S. Education Department revoked its access to federal aid, a deal-breaker for any institution. Federal officials alleged the college “routinely and flagrantly” flouted the rules by withholding hundreds of thousands of aid dollars from students.
College President Jeffrey S. Moore defended the institution in a statement and telephone interview Tuesday. He conceded that the college had owed aid money to students, but he attributed the problem to an “antiquated student information system” that failed to match students to their aid.
“There was never anything intentionally done wrong,” Moore said. “We never intended to hold student moneys that should have been paid out to them.”
Federal officials alleged in a March 9 letter that an auditor found unpaid loan funds totaling $262,382 in the last fiscal year, and that a follow-up report found an unpaid balance of $137,385 owed to 109 students. The school enrolled 361 students in various career programs.
The letter said aid officials “has no basis for confidence” that the college wouldn’t have kept the money forever, “had it not been caught.”
Moore said college officials traced the issue to “internal control problems,” chiefly related to an obsolete system for tracking aid payments. He said the college implemented new accounting processes and cooperated with regulators.
In the end, he said, the federal government acted out of a “lack of trust in the school”.
The University of the District of Columbia caught flak in 2010 for being weeks late in disbursing aid to students. That institution blamed a change in the rules for paying out the aid checks.
One sticking point for ACT was an auditor’s spreadsheet that showed a number of cleared checks that had not, in fact, been paid. Federal officials viewed that document as a smoking gun, proving the school’s complicity in attempting to falsify its records.
Moore contends the false records did not originate with anyone at the college but rather from an unintentional “misrepresentation” by an auditor who misinterpreted company documents.
Moore said the government acted unfairly in withholding aid totaling $1.4 million from the college, and in effectively forcing it to close its doors after 20 years in business. Student aid supplied the vast majority of ACT’s revenue.