What’s New
Saint Augustine’s University has entered a $30-million credit agreement with a venture-capital firm to pay outstanding debts and restore its full accreditation. To secure the loan, the North Carolina-based institution offered up its real estate as collateral.
Saint Augustine’s is on probation with its accreditor, the Southern Association of Colleges and Schools Commission on Colleges, or SACSCOC, for financial instability.
Since signing the agreement, Saint Augustine’s has received $7 million of the available credit, which comes with a 24-percent interest rate, according to local news sources WRAL and WTVD. The university will use some of the money to conduct an audit required for it to get off probation with SACSCOC, a crucial step needed to regain its full accreditation.
SACSCOC will make a final decision on Saint Augustine’s accreditation in December.
“The partnership with Gothic Ventures marks a pivotal moment for SAU as it embarks on a multi-year strategic plan to stabilize and grow the university,” said Brian A. Boulware, chairman of Saint Augustine’s Board of Trustees, in a press release. “This funding secures our immediate needs while allowing us to implement our long-term vision. We believe our partnership with Gothic Ventures will be crucial to our journey toward excellence.”
Saint Augustine’s did not respond to multiple requests to speak in detail about the nature of the loan or the university’s overall financial health.
The Details
The loan will help cover millions of dollars in expenses the university has racked up in recent months amid plummeting enrollments. From 2012 to 2022, enrollment at Saint Augustine’s decreased by almost a quarter, according to the National Center for Education Statistics.
The college will spend $3 million of the loan to compensate employees and student workers who missed paychecks this past spring, according to a document made available to WRAL.
Saint Augustine’s will also pay $1.8 million to the U.S. Department of Education as part of a loan repayment. The university will spend $600,000 on student refunds, $545,000 on property insurance, and $375,000 on other expenses and fees.
“This loan represents a significant affirmation of our commitment to our students and staff,” said Marcus H. Burgess, the university’s interim president, in a press release. “We are grateful for the belief that Gothic Ventures has placed in our vision, allowing us to focus on enhancing the academic experience while showcasing our resilience in the face of adversity.”
Backdrop
Saint Augustine’s accreditation woes began in 2016 when SACSCOC placed it on probation, citing poor accounting practices and high debt loads. An audit by Saint Augustine’s Board of Trustees in 2020 found the university failed to keep accurate records, didn’t properly account for wages students earned in the federal work-study program, and failed to submit Pell Grant and student-loan data in a timely manner.
In December 2023, Saint Augustine’s was stripped of its membership in SACSCOC, moving the university one step closer to losing its accreditation outright. Saint Augustine’s had failed to meet SACSCOC’s deadlines to submit financial records and documents related to its governance structure.
That month, the board fired the university’s president, Christine Johnson McPhail, and, within the same week, the faculty delivered a unanimous vote of no confidence in the interim president and the Board of Trustees. Saint Augustine’s later appealed the SACSCOC decision.
By the spring of 2024, Saint Augustine’s could no longer make payroll. That left faculty, staff, and student workers unpaid for months, and triggered an investigation by the Department of Labor.
In April, the university decided to cancel its 2024 football season. The Central Intercollegiate Athletic Association later suspended Saint Augustine’s from all sports competitions.
A group of alumni and former trustees filed a lawsuit against the university in May, alleging fiscal mismanagement and demanding that the Board of Trustees be unseated. The lawsuit was ultimately dismissed.
After a lengthy appeal, SACSCOC restored the university’s membership in July. This puts Saint Augustine’s back on probation and gives the university until December to improve its finances. To comply, Saint Augustine’s will spend $650,000 of the loan from Gothic Ventures to pay for two years’ worth of audits.
What’s Next
Saint Augustine’s still has to show SACSCOC that it has installed better record-keeping practices and shored up its finances.
In December, SACSCOC will decide whether to take the university off probation and restore its full membership.
Losing accreditation would cut off Saint Augustine’s students from access to federal financial aid.
