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STEUBENVILLE -- Eastern Gateway Community College has stopped enrolling new students in its popular but controversial Free Benefits Program, and in recent federal court filings accused the U.S. Department of Education of using stall tactics throughout the year-long litigation over it to push the school to the brink of fiscal ruin.
The Free College Benefit program fueled the college's meteoric growth, turning the small, in-person community college into a nationally recognized online powerhouse.
But DOE contended that rapid growth was funded with Pell Grants, a needs-based federal aid program meant to help low-income students get college degrees. DOE alleged the college violated financial aid rules by subsidizing the FCB program with Pell Grant money they'd awarded to the income-eligible students, and in July 2022 the education department ordered the college to stop offering the FCB program and submit a teach-out agreement.
EGCC filed suit in September, arguing DOE had violated the college's right to due process by issuing the orders without allowing them a chance to respond and in October a federal judge agreed, granting the school a preliminary injunction and enjoining DOE from limiting the school's access to federal student financial aid. Since then, EGCC's lawsuit slowly worked its way through the court system until April, when DOE notified the court it had rescinded its cease-and-desist letter as well as its demand for a teach-out agreement and was instead issuing a "preliminary program report."
That's significant, EGCC insists, because DOE initially told the judge its final program report would be released within 30 days of oral arguments in the October 2022 preliminary injunction and a final order would have allowed the college to immediately appeal. Instead, the education departments issued its preliminary findings -- two days before a joint status report was due -- as part of a "broader preliminary program review report, not yet appealable, and requiring significant collections of file reviews, data and response due within an unreachable 90-day deadline," the college complains.
Meanwhile, the college says it is owed millions of dollars in reimbursement for student aid it had paid out of institutional funds.
"(DOE) waited several months (during which it continually and repeatedly delayed reimbursements owed to EGCC) and then, just before a court deadline, issued its finding as 'preliminary,' with the apparent intention of bankrupting EGCC before any administrative process can happen," the motion suggests, adding the school "vigorously contests much of the false narrative and conclusions" within the preliminary program review report and will "continue the administrative process with respect to those statements and findings."
Contents of DOE's preliminary report are, by department policy, considered confidential. A copy was submitted to the court under seal.
EGCC has been operating under Heightened Cash Monitoring 2 status. Schools at that level no longer receive student aid in advance; rather, they make disbursements to students from their own institutional funds, and then request reimbursement from the Department of Education.
In its motion for summary judgment, EGCC told a federal judge DOE had processed "only $8.5 million of the more than $25 million in federal student aid it is owed."
According to the college, it took the education two months to partially process its October 2022 reimbursement request and five months to finalize it. Until that first claim was finalized, EGCC was barred from submitting a second.
The college submitted its second reimbursement request on March 31, this time using a third-party servicer in a bid to satisfy DOE's concerns and "set up a more streamlined, steady process (and establish) consistent cashflow," but as of May 23, said it "has not received any specific feedback or information" regarding the status of the second claim.
EGCC's motion characterized the reimbursement delays as "unreasonable" and said EGCC's situation is "urgent."
"(DOE) is running down the clock on EGCC, denying it timely access to funding under HCM2 and pushing out the program review process such that EGCC will be bankrupt before it even has a chance to defend itself," the motion stated. "In short, (DOE) has and continues to deprive EGCC of administrative and constitutional due process."
The education department, in a motion filed the following day, May 23, argued the college "now seeks to circumvent the administrative process altogether and demand from the court a legal ruling on an abstract record of law, without the benefit of a factual record," suggesting its preliminary program report "is quite obviously not a final agency action (so) the court lacks jurisdiction ... to review it."
"The preliminary report is just that--preliminary--and because the administrative program review process is ongoing, the department's April 19 ... preliminary review cannot be said to be DOE's 'last word' on the subject 'short of an enforcement action," DOE attorneys argued.
Since there is no final order, DOE insists there's nothing for the court to decide "because the cease-and-desist letter has been withdrawn." DOE also pointed out it wasn't until settlement talks broke down that they'd issued the preliminary program report, "(setting) in motion an administrative review process."
There are several steps that would need to occur before EGCC's claim could proceed, including a final decision regarding the lawfulness of its Free College Benefit program, DOE says.
"Future administrative proceedings could change the scope of the claim or even grant (EGCC) the relief it seeks," the motion stated. "Any claim based on the preliminary report is therefore not fit for adjudication at this time ... Nor is there any hardship to withholding potential review at this juncture and requiring that (EGCC) go through the necessary administrative procedures."
But EGCC insists it asked for the preliminary program report "several times" during the last six months and called DOE's withdrawal of its cease-and-desist order a "blatant effort to foreclose judicial review and further delay EGCC's opportunity for meaningful due process."
"Any time you get the federal government involved it's going to be a mess," said one faculty member, conceding faculty and staff are understandably anxious. "They have the resources and the time to drag it out."
Jim Corrin, president of the Eastern Gateway Education Association, said the union has been working with President Mike Geoghegan, who has announced he will retire next June. An interim president will be chosen while a nationwide search is conducted.
"We're trying to do what's best for the institution, what's best for students and what's best for the community," Corrin said. "I can say we've made progress in the talks -- we did meet with the board of trustees and they did indicate we would have a say in (choosing) an interim president, that they would hear our concerns. Obviously, they have their own process, but they indicated they would take into consideration what our concerns are and what we have to say. That was a positive thing to hear."
Neither the education department or community college would discuss the case.
A spokesman for the Department of Justice, representing DOE in the court case, declined comment, adding their motion to dismiss is public record.
Geoghegan said they cannot comment on pending litigation, "but throughout this process at Eastern Gateway we have always put our students, our staff and our faculty first, and we will continue to always stand up for them and the communities we serve."
Meanwhile, the Higher Learning Commission review team's not-yet-public draft report noted significant progress had been made toward lifting its probationary status but nonetheless suggested it should be extended, opining the criteria for accreditation and federal compliance requirements had not been met.
That preliminary report won't be final until the commission meets in August and EGCC has had a chance to respond, after which a final decision will be made.
While EGCC apparently did not meet two core components--down from five in 2021--the review team found the school lacking in two areas it previously met: Whether the "rigor of the institution's academic offerings" is appropriate and if the institution's resource base "supports its educational offerings and its plans for maintaining and strengthening their quality in the future."
"Probation is the most accurate sanction for EGCC because there has been evidence of substantial progress toward meeting the criteria for accreditation," the draft report indicated.
But the review team also was bothered by what it described as a "schism" between the college's roots as "an engaged, responsive regional community college vs. a large, national online college."
"There are some valid points, but there are some unrealistic points, and we're going to have a chance in August to point out where we think they're wrong with some of the things (they cited) and discuss it," faculty members said. "In that report, if you look at the big picture, you can see what HLC's concern is -- the need for more faculty. But there are a lot of good things in there, too, a lot of positives where they recognize the hard work that's been done. Faculty and staff ...we fought to make changes. If you read through it, the overall picture is we've done a lot of good, we've made progress but there's still a lot of work to do."
Efforts to reach the Higher Learning Commission and the Department of Education for comment were unsuccessful.