As Argosy University’s financial problems worsened, the troubled institution took millions in taxpayer dollars that were supposed to be disbursed to students, and instead used the money to pay its staff and vendors, according to the Education Department.
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As Argosy University’s financial problems worsened, the troubled institution took millions in taxpayer dollars that were supposed to be disbursed to students, and instead used the money to pay its staff and vendors, according to the Education Department.
In a Wednesday letter to university officials, the department called Argosy’s action a “severe breach of the required fiduciary standard of conduct” that “demonstrates a blatant disregard of the needs of its students.” The department said that nearly $13 million in money meant for students — funds left over after tuition and fees are paid, typically used for living expenses — had been improperly kept from them.
In large part because of that breach of trust, the department wrote that it was revoking Argosy’s eligibility for federal Pell Grants and student loans, effective immediately, unless the university appeals the decision successfully. For Argosy — a for-profit university that attempted to convert to nonprofit status in 2017 — the loss of federal student-aid funds makes it likely that it will soon close. For-profit colleges rely heavily on taxpayer-funded financial-aid programs, and typically go out of business quickly if the spigot of federal money is shut off.
In an emailed statement, Argosy said it was “disappointed” with the department’s decision and is “working to determine the best path forward for students at this time.”
The department in 2017 tentatively approved Argosy’s switch to nonprofit status, but Wednesday’s letter formally rejected that change in tax status as well.
Established in 2001, Argosy was long operated by the for-profit Education Management Corporation, and it specialized in graduate degrees in fields such as psychology. The university boasted 17,664 students and 26 campuses as recently as 2017, the same year it was sold to the nonprofit Dream Center Foundation. But Argosy struggled under its new owners, with enrollment dwindling and campuses closing. A federal judge last month placed Argosy in federal receivership.
In recent weeks Argosy students complained to the department and various news outlets that their financial-aid disbursements had been delayed. Students often borrow in excess of the tuition cost so they can use the extra money for bills or living expenses.
I can’t afford groceries right now, or medical. I haven’t had my medicine that I need for five days.
“I can’t afford groceries right now, or medical,” one Argosy student told a television station in Tampa, Fla. “I haven’t had my medicine that I need for five days.”
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Rep. Charlie Crist told the TV station that the situation was possibly criminal.
“It’s called stealing. It’s an old-fashioned term,” said Crist, a Florida Democrat. “And if that’s what’s discovered, then there ought to be criminal actions taken against the wrongdoers.”
Michael Vasquez is a senior investigative reporter for The Chronicle. Before joining The Chronicle, he led a team of reporters as education editor for Politico, where he spearheaded the team’s 2016 Campaign coverage of education issues. Mr. Vasquez began his reporting career at the Miami Herald, where he worked for 14 years, covering both politics and education.
