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Hundreds of schools on a federal watch list for financial or other management problems have received millions in federal funds as part of a $2.2 trillion coronavirus relief package.

A RealClearInvestigations review found that 87% of the 447 troubled universities, for-profit colleges, and other learning institutions identified by the U.S. Department of Education as requiring “heightened cash monitoring” have received some form of assistance in recent weeks, totaling tens of millions of dollars.

Lori Loughlin, with her daughter Olivia Jade Giannulli, left, is fighting charges she and her fashion designer husband Mossimo Giannulli bribed their daughters' way into the University of Southern California. The school and seven other universities tied to last year’s admissions scandals got federal coronavirus relief money.

In addition, money went to all eight of the universities connected to last year’s admissions scandals – in which actors including Lori Loughlin, Felicity Huffman and other wealthy parents were accused of offering bribes and faking documents and tests to get their children into preferred schools, including the University of Southern California, Georgetown University and Stanford University. The University of Texas at Austin, where a soccer coach took a $100,000 bribe to help admit a student, got $31 million, and Texas Southern University, where the school’s admissions director was fired in September for allegedly taking bribes to admit several students to the Thurgood Marshall School of Law, received $12 million.

The assistance to troubled and scandal-plagued schools – which received part of the $14 billion provided in higher education relief - seems likely to add to concerns about how trillions of dollars are being spent by the federal government to deal with the economic fallout from COVID-19. While the lockdown of much of the economy has created an urgent need for economic assistance, the quickness with which so much is being delivered makes it hard to ensure it is being spent properly.

Smaller schools, both public and private, compose the majority of the federal watch list, which demands stricter oversight of how the school handles its financial aid payments from the federal government. The schools are asked to file more detailed reports and more scrutiny is given to the details of how the money is handled.

Among the schools on the most recent monitoring list released March 1: 

La’ James International College, an Iowa-based chain of beauty schools, is under federal monitoring after a case of consumer fraud. It got coronavirus aid.
La’ James International College
  • Roxbury Community College in Massachusetts, which has been dogged by investigations over financial troubles and failure to properly investigate alleged campus crimes, received $1.6 million in relief.  
  • Bacone College, a university for Native Americans in Oklahoma, was nearly crushed by debt in 2018 and has for years been subject to oversight by the feds. It received $509,000 in relief funding.
  • Cheney University of Pennsylvania, where investigators found mistakes in up to 85% of financial aid records reviewed between 2011 and 2014 and now has a $40 million debt to the state, received $663,000.
  • La’ James International College, an Iowa-based chain of beauty schools, was accused in 2014 of consumer fraud by the Iowa Attorney General's Office. In a 2016 settlement of the lawsuit, the school agreed to forgive $2.1 million in student debts, pay an additional $550,000 for partial tuition refunds and “significantly change its business practices.” It received $134,215 in relief funds. The school and its six campuses are under federal oversight.

School representatives say the federal assistance is a godsend during the crisis.

“We have not received the money yet, but the first thing we will do is get the money to the students,” said Travis Becher, vice president of La’ James. “Then we have to take care of bills, energy, water. It’s not like we’re going on vacation with this.”

Becher said he is uncertain if the money is subject to the same reporting requirements of heightened cash monitoring.

“From what I can tell so far, it’s not, but we’re prepared to do whatever we have to,” he said. “We’re veterans at this now.”

Representatives from Cheney, Bacone and Roxbury did not respond to an interview request.

The Department of Education press office declined an interview request. An official, in an email sent on condition that the sender not be further identified, said the money was approved by Congress, so “if an institution submits a completed certification form, we disburse the money.”

Aly Raisman, one of the accusers in the sex-abuse scandal of ex-Olympic team physician Larry Nassar of Michigan State University. The school, subject to federal financial monitoring, got $26 million in coronavirus relief.

Institutions on the list are given greater scrutiny than other schools when being given federal student aid money. To be released from the oversight, schools must show improvement in money management and/or make policy changes to improve the handling of fiscal issues.

Nearly $14 billion of the federal CARES Act money was given to the schools, which must spend at least 50% to help students “cover expenses related to the disruption of campus operations due to coronavirus,” according to a letter sent earlier this month to recipients by U.S. Department of Education Secretary Betsy DeVos.

Those student costs could include housing, food, technology and child care.

In a website posting for its members, the National Association of Student Financial Aid Administrators notes that there is “no requirement in the law” for students to formally apply for the money: “You only need to be able to justify that the student has expenses related to the disruption of campus operations due to coronavirus. … There is no requirement in the law to collect receipts.”

Megan Coval, policy analyst for the association, did not respond to an interview request.

Larger universities or groups that are under cash monitoring oversight and received relief include the Puerto Rico Department of Education, which got $3 million.

An audit released in July found the agency, which handles the finances of public elementary, secondary and some colleges and universities in Puerto Rico, failed to properly manage $589 million in funding it received in 2018 to help recover from tropical storms that swept the island in 2017.

Michigan State University, under financial oversight as part of its penalty for its numerous failings in the Larry Nassar sex abuse scandal, received $26 million.

Also receiving chunks of federal relief funding were colleges that have in the past been fined by state or federal officials for numerous violations, including falsifying graduation figures.

Keiser University got $21.1 million in federal coronavirus aid. In 2012, it agreed to retrain thousands of students after an investigation by the state of Florida.

DeVry University, which received $4.7 million in relief, was part of a settlement announced earlier this month in a lawsuit by former students who alleged DeVos was unduly delaying their claims for student loan forgiveness from the university. Under the agreement, the education department will make a decision on debt relief from DeVry and several other colleges. The class-action lawsuit came from 170,000 students who claim they were deceived by inflated graduation rates and job prospects.

Keiser University, which in 2012 agreed to retrain thousands of students after an investigation by the state of Florida, received $21.1 million. Founder Arthur Keiser is a member of the U.S. Department of Education’s National Advisory Committee.

DeVry and Keiser were among the 30 universities named in a U.S. Senate investigation in 2012 that found $32 billion in federal student loan money had been allocated to them despite outsized student withdrawal rates.

The speed with which relief is being provided creates a scenario that will make it almost impossible to accurately track, said Jonathan Bean, a Southern Illinois University economic historian.

“It’s hard during normal times to track funding and spending, and the truth is that the money is going out so quickly it’s going to reach the good, the bad and the ugly,” he said. “I don’t see a way that it is avoidable. There will be many investigative pieces coming later.”

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