Dive Brief:
- Eastern Gateway Community College, in Ohio, will no longer offer a free college program that the U.S. Department of Education accused of being illegal. The move ends a protracted policy battle between the two entities.
- Michael Geoghegan, Eastern Gateway’s president, said in a statement last week that “to move forward with productive settlement negotiations” with the Education Department, which it sued in September, the college agreed to no longer maintain the tuition-free college deal.
- A couple of days after Geoghegan made his statement, college officials said in court filings they were dropping the lawsuit against the Education Department after reaching a tentative settlement with the agency. Court records do not detail the settlement’s terms, and the Education Department did not provide a comment by publication time Tuesday.
Dive Insight:
Eastern Gateway’s saga began in July 2022, when the Education Department alleged the institution’s free college program charged students who received Pell Grants more than those who did not, a violation of federal law. Pell Grants benefit students from low- and moderate-income backgrounds.
The last-dollar program, which covers tuition costs once other financial aid has been applied, specifically helps students affiliated with labor unions. Eastern Gateway credits the initiative with fueling major enrollment gains. The college enrolled more than 30,000 students in fall 2022, more than 10 times the number it enrolled in fall 2013, according to federal data.
The Education Department has taken issue with the way its free-college program was structured.
It zeroes out tuition bills of both students who receive federal Pell Grants and those who do not, according to the Education Department. After accounting for other aid, students in the program receive a scholarship for the remainder of their costs, which the college said are funded by outside sources.
However, in reality, little money came from outside entities, the Education Department has said. That meant students who receive Pell funding are charged tuition that the federal government pays for, while students who do not get Pell money pay nothing, the department alleged.
Eastern Gateway refuted this portrayal of its program and in September sued the Education Department, arguing the agency’s actions infringed on due process rights and threatened the institution’s survival.
Starting August 2022, the Education Department forced Eastern Gateway to pay for students’ federal financial aid with its own money and request reimbursement later, a sanction called Heightened Cash Monitoring 2. The department also required the college to make teach-out plans that help students transfer to other colleges.
The college asked a federal court in May to rule in favor of its lawsuit without going to trial, saying its situation had become urgent. By the end of the college’s 2022-23 academic year, the Education Department had allegedly reimbursed it just $8.5 million of the $25 million in federal aid it said was owed.
The Education Department’s “unreasonable delays threaten EGCC’s continued ability to function,” the college wrote that month.
However, the college and agency now seem on better terms. Geoghegan, the college’s president, said last week the Education Department allowed for Eastern Gateway to offer the free college program in the fall 2023 semester for students who enrolled in spring or summer term classes this year.
“We know that for so many students this last dollar scholarship benefit has been transformative,” Geoghegan said. “Eastern Gateway is proud of the fact that more than 20,000 students have graduated from our community college with no debt. We are committed to investing in your academic success.”