News From Terre Haute, Indiana

April 2, 2012

Federal audit says SMWC should return $42M in student aid

College plans to challenge findings

Sue Loughlin
The Tribune-Star

TERRE HAUTE — A federal audit says St. Mary-of-the-Woods College should return $42 million in loans and grants made to students between 2005 and 2010, something the college plans to challenge.

The Office of the Inspector General (OIG) of the U.S. Department of Education says the college’s students, both on campus and distance education, should not have received Title IV federal financial aid.

The audit says the college’s distance learning programs did not meet the regulatory definition of “telecommunications courses” and should instead have been categorized as “correspondence” courses.

The college disagrees and says its accrediting agency has designated its distance programs as telecommunications.

“I’m a little angry,” Dottie King, college president, said in a telephone interview today. “I know we have done nothing wrong.”

The college “has always acted in good faith with full transparency, and the program has always been completely approved by the Higher Learning Commission,” the college’s accrediting agency, King said.

The audit report includes recommendations to the U.S. Department of Education, and the Woods will now begin discussions will DOE. The college has hired outside legal counsel.

In the meantime, nothing changes for the college or its students while the matter is resolved, which could take some time. The college remains accredited and students’ financial aid is not affected. “It’s business as usual,” King said.

The audit says DOE should “terminate” the college’s participation in the federal Title IV program and require the return of all Title IV funds disbursed during award years 2005-06 through 2009-2010 to the federal government or FFEL lenders.

It also recommends that Title IV funds disbursed in 2010-11 should also be returned.

King believes the $42 million figure is misleading because students must already repay their federal loans and the government can’t ask that those funds be repaid twice.

The audit findings are recommendations that have been forwarded to the Office of Federal Student Aid (FSA) within the U.S. Department of Education.

FSA will undertake an independent review of the recommendations and the college’s response and determine whether any action is warranted, and if so, the nature of such action.

According to the audit report, under the Higher Education Act of 1965, “an institution is not eligible to participate in the Title IV programs if 50 percent or more of its students were enrolled in correspondence courses during its latest complete award year. The college considered its programs to be offered in either on-campus or telecommunications formats. It did not consider any of its programs to be offered through correspondence. However, based on our review of the College’s documentation and interviews with college officials and students, we concluded that courses were in fact offered in a correspondence format.”

The college submitted an extensive response to the OIG, which is part of the audit report.

The college has an enrollment of about 1,500 students.

The campus community is being informed of the findings today.

Sue Loughlin can be reached at (812) 231-4235 or sue.loughlin@tribstar.com.