The former president of a small South Carolina college that last year recruited low-income students from Washington with the promise of a free education was arraigned yesterday on charges he conspired to fraudulently obtain $166,000 in U.S. Department of Education grant funds.

Henry Dargan McMaster, U.S. attorney for South Carolina, said yesterday an indictment was brought Aug. 18 against former Friendship College president Charles W. Petress of Rock Hill, S.C., and two former school administrators.

The indictment charged that Petress and the two school officials, Chandra M. Patel and Arthur W. Henderson, conspired to submit false information requesting federal funds for students in the Basic Educational Opportunity Grant and College Work Study programs.

Last October about 110 local students travelled to Rock Hill, a suburb of Charlotte, N.C., to enroll in Friendship College. They said at the time that they had been recruited with promises of free room and board and education there.

Within a few days, most had returned to Washington, complaining that the dilapidated campus was largely uninhabitable and that classes listed in a brochure they had been given did not exist. The students said when they arrived at the school they were told their free education depended on filling out education grant forms.

Last December, Friendship College closed. In the 18 months preceding the closing, according to the indictment, the U.S. Department of Education gave the school more than $200,000 which was to have been used to pay for student living expenses and education costs under a federal program to encourge advanced education.

The indictment said that ineligible students were certified for the program and that the school failed to accurately account for its funds. In addition, the indictment charged, some of the money was used for purposes not authorized by the government.

In addition to the conspiracy charge, Petress is charged with eight counts of making false statements and three counts of embezzling $71,128. He has been released on bond. No trial date has been set.