The Education Department’s placement of Howard on a status of “heightened cash monitoring” means the school must provide full documentation about each student on financial aid before the government will release the funds — creating both a cash-flow challenge and a public-relations embarrassment for the prominent historically black university in the nation’s capital.
The oversight action is likely to significantly slow the process of transferring federal funds to the university.
Howard President Wayne A.I. Frederick, who disclosed the government’s action in an email to the campus community Tuesday, said Howard is taking “all necessary measures to avoid any adverse impact to students in the processing of aid and receipt of funds.”
Problems in the financial aid office became public in late March when a university investigation found that for several years, some employees who received tuition benefits that covered the cost of classes were simultaneously receiving university grants. In effect, officials acknowledged, those employees were double-dipping. Six employees had been fired for what the university termed “gross misconduct and neglect of duties” in connection with the misappropriation of $369,000 in financial aid.
The scandal caused an uproar on the campus and drew federal scrutiny. The financial aid issue intensified student protests over a number of administrative concerns.
On Tuesday, Frederick said the 9,400-student university has taken significant steps to beef up its internal oversight of financial aid, including by hiring a new financial aid director and compliance officer. He pledged to work closely with the Education Department and others “to improve service, restore confidence in our processes, and continue to provide the world-class education that our students deserve.”
About 540 colleges, universities and vocational schools were on “heightened cash monitoring” as of June 1, according the Education Department.
Of those, 66 were on what is known as the second level of heightened monitoring, meaning they faced greater scrutiny, and Howard joins that list.
Among others were the American Broadcasting School in Oklahoma City, Faith International University in Tacoma, Wash., and Wiley College in Marshall, Tex.
Most of Howard’s undergraduates receive financial aid. Just under half — 46 percent — qualify for need-based federal Pell Grants. The timely flow of federal grant money and loans to Howard is crucial for the school’s operations.
The Education Department’s Federal Student Aid office notified Howard of the oversight measure in an Aug. 13 letter.
“The Department is taking this action as a result of serious administrative capability issues” identified in compliance audits for 2015 through 2017 and a program review in May of this year, the office wrote in its letter to Frederick. Among the issues the office cited were “a lack of internal controls,” a failure to reconcile account records and a failure to ensure that students begin attendance and are eligible to receive federal financial aid.