The money Argosy University had in the bank when it closed won’t all be used to repay students and taxpayers for financial aid the school used inappropriately.
Instead, much of the $4.4 million the institution had on hand could go to the court-appointed receiver and attorneys overseeing the wind-down of the for-profit college chain after its financial collapse.
In May, a federal judge was asked to approve more than $2 million in fees and expenses for those firms. The request includes $973,000 in legal fees and $28,000 in expenses for Dottore Cos., the firm acting as the schools’ receiver, essentially its financial steward.
Sunflower, one of the companies Argosy owes money to, criticized the request for fees and expenses as “exorbitant and excessive” in a legal challenge filed June 12.
Betsy Talbot, Minnesota Office of Higher Education manager of institutional registration and licensing, agreed with that characterization. Talbot is one of the state officials working to recover money Argosy received that was supposed to go to students.
“The receiver, who is supposed to be acting in the best interests of the company, should not be billing in such a manner,” Talbot said in a phone interview.
Representatives from Dottore Cos. did not return a call seeking comment Wednesday. Officials in state Attorney General Keith Ellison’s office declined to discuss their efforts to recoup money from Argosy.
The school owed Minnesota students $1.3 million when it suddenly closed in March. Students at the Eagan campus were left without financial aid they were expecting to cover living and other expenses and had to scramble to find schools to continue their studies.
The chain of for-profit schools closed campuses nationwide after it lost access to federal financial aid because it used $13 million meant for students to cover payroll and other operating costs. Students, states and creditors the chain owes money to are now fighting in court to recoup their loses.
MINNESOTA MONEY
Much of what Argosy owed Minnesota students came from federal financial aid. State leaders do hope to recover about $181,000 worth of state loans and grants the school never provided to students.
About $62,000 of that money is in a restricted bank account that state officials hope the court will turn over, Talbot said. The rest would have to come from whatever cash Argosy has remaining that is now under the control of the receiver.
“It would be inappropriate to use those funds for anything other than the original intended purpose,” Talbot said of the state financial aid students were due to pay for things like food, rent and child care.
The size of the request for fees and reimbursement by the receiver and attorneys was first reported Monday by the New York Times, which noted students and creditors of Argosy had expressed frustration over the amount. Mark Dottore, who leads the Cleveland-based firm, defended the request as appropriate for the work involved.
Roughly 1,000 students were enrolled at Argosy when it closed. A number of state and private schools stepped in to help students.
LOAN HELP AND FORGIVENESS
In May, Minnesota lawmakers approved legislation to help Argosy students by sending them the loan and grant money the school failed to provide. State officials hope to eventually recoup that $181,000 from the school.
The U.S. Department of Education is expected to quickly forgive recent federal loans and aid students received to attend Argosy because of the sudden way in which the school closed. That’s not the case for many students who attended other for-profit schools that closed. Globe University and the Minnesota School of Business as well as ITT Tech and Corinthian College campuses have been shuttered in recent years.
Many students who attend those schools are still waiting to recoup money or have federal student loans forgiven. Last week, Sen. Tina Smith of Minnesota joined her Democratic colleagues in asking U.S. Education Secretary Betsy DeVos to expedite the processing of loan-forgiveness requests.
Smith said more than 2,700 Minnesotans have waited an average of 882 days to have their loan-forgiveness requests processed.
“It is time for your cruel delays to end and for you to provide federal student loan discharges to which defrauded borrowers are entitled under the law;” the letter to DeVos says, “the courts have ordered it, students are begging for it, Congress expects it, and justice demands it.”