The US Department of Education will no longer provide financial aid to Argosy University after the university failed to comply with certain federal standards.
The California-based university system, owned by Dream Center Education Holdings (DCEH), received a letter from the department on Wednesday stating that its application for participating in federal student aid programs by converting the school from a for-profit to a nonprofit institution had been rejected.
The Department of Education said that the university did not meet its standards for financial responsibility and administrative capability to continue to receiving the aid. It also alleged the school of not distributing loan money it owed to the students.
“ED took this step because Argosy does not meet certain standards, including administrative capability, financial responsibility, and the institution’s duty to use federal student aid program funds only for their intended purpose,” the Department said in the statement.
“Argosy’s failure to pay credit balance refunds owed to its students and parents demonstrates that Argosy cannot meet the required standards.”
Students enrolled in Argosy institutions have been waiting for their federal aid stipends, amounting to $13 million, for weeks. Meanwhile, the Dream Center has been trying to close and sell some of its campuses in order to meet its financial obligations, according to The Washington Post.
Dream Center officials were apparently shocked over the latest development.
“We are disappointed at the decision by the Department of Education today to deny Argosy University’s request for change of ownership,” Mark Dottore, the court-appointed receiver for Dream Center Education Holdings, said in a statement.
“We are working to determine the best path forward for students at this time,” he added.