Lapses in oversight could cost Cheyney $29 million

For the second time in a decade, Cheyney University has failed to properly manage financial aid that it awards students, and as a result may owe the U.S. Department of Education more than $29 million.

Errors were found in nearly 85 percent of about 4,400 financial aid records reviewed from 2011 to 2014, according to a report released Thursday by the Pennsylvania State System of Higher Education.

The university, one of 14 in the system, could not provide high school transcripts for 45 percent of the students who received aid during that period, the system said. And the university could not document that some students receiving aid were making the required progress toward a degree.

"It appears as if a large percentage of students who received grants and loans were not eligible or should not have received the level of funding that they did," said Kenn Marshall, system spokesman.

The review was conducted by Atlanta-based Financial Aid Services. The system hired the company more than a year ago after suspecting irregularities at the historically black university, on the line between Delaware and Chester Counties. Since then, the company has been running the university's financial aid office.

"This report brings to light the deficiencies of many enrollment management functions, the university's policies and procedures, communications, academic progress, student accounts, student records, financial records, and student information management systems," Frank T. Brogan, state system chancellor, wrote in a letter to the system's board of governors and Cheyney's council of trustees.

The system turned the 400-page report over to the U.S. Department of Education, which will decide how much the school owes and what penalties should be assessed, Marshall said.

Cheyney has struggled financially for years and faces another drop in enrollment this fall. The university declined to release its current enrollment. Last fall, 1,022 students were enrolled.

The university, which operates on a $30.4 million budget, has accumulated a $15 million deficit. The school continues to operate through a line of credit from the system, Marshall said. He said he was not sure how Cheyney would repay a penalty.

Frank G. Pogue, interim Cheyney president, said in a statement that "key administrative workers" who oversaw financial aid during those three years no longer work there.

"We have put in place a number of corrective measures," he said.

Pogue joined Cheyney in November. The university abruptly announced the retirement of former president Michelle R. Howard-Vital last July. Marshall would not say whether her departure had anything to do with the financial aid findings.

Marshall said the system first became aware of a problem less than two years ago, when the Pennsylvania Higher Education Assistance Agency noticed that Cheyney was not complying with requirements for the state's financial aid program. The system then discovered problems with federal aid, Marshall said. The university was not maintaining the required documentation at the end of each year to show the aid had been spent appropriately, and had not been since 2010-11, he said.

The system then hired the Atlanta firm to take over Cheyney's management of financial aid, and notified the federal education department of the potential problem.

The system worked with the school from May 2008 through spring 2010 before returning control to Cheyney. "Unfortunately, the same situation occurred," Marshall said.

The union representing the state university faculties said that while the review raises "grave concern," Cheyney students, alumni, faculty and coaches aren't to blame.

"Cheyney's historical commitment to provide opportunity and access for students of diverse backgrounds is as relevant today as it has always been," said Kenneth D. Mash, president of the faculty union, "and there are students for whom Cheyney's nurturing environment is the best path for future success."