The Inside Story: Paine College trustee memo claims federal money intended for students used to pay bills

News 12 at 6 o'clock / Wednesday, May 16, 2012

AUGUSTA, Ga. -- A local college is in hot water after a former board member accused the school of using financial aid money to pay past due bills.

Paine College President Dr. George Bradley is talking Only to News 12.

"Our financial aid is strong, our faculty is strong, our campus is beautiful," Bradley said.

He is on the hot seat after an internal audit committee memo from Wayne Kendall leaked to the media.

"This is a member or former member of the board of trustees?" we asked.

"Yes, a former member of the board of trustees," Bradley said. "That's correct."

The memo claims the college entered the year with bills 60 days past due amounting to $800,000.

"Yes," Bradley said, "the people who put us in a situation where we are 60 days past due are no longer employed with the institution. That is something that we just don't tolerate."

The memo also claims federal money meant for student refunds were used "almost exclusively to pay the bills."

"Those bills were paid with regular unrestricted funds," Bradley said.

"Unrestricted funds that we were reimbursed from the federal government?" we asked.

"From the federal government," Bradley said. "That is correct."

Bradley claims this is no federal financial aid violation.

"From a person who is not in higher education," Bradley said, "you would not understand the process. We are in compliance because we are being reimbursed for that money."

The memo blames "uncontrolled spending" for the school's financial troubles. Kendall notes the school VP of Institutional Advancement Brandon Brown purchased five new vehicles in the middle of financial upheaval.

"Brandon Brown had my approval," Bradley said. "He had the president's approval to negotiate the institution buying fleet. They were Toyotas, and he got it at an excellent price."

This all comes at the hands of a former trustee who notes the memo is "based on recollections of former employees who may believe they were treated unfairly."

The college says they used the new Camrys and Corollas for the athletics and admissions office.We reached out to the U.S. Department of Education. Chris Greene with the department has requested we send him a copy of our story.

Statements related to this story:

From Chris Greene at the Department of Education:
“Schools participating in the federal student aid programs draw down student aid funds from the Department of Education on behalf of eligible students attending their institutions. Within three days of drawing down those funds, the institution must apply those funds to student accounts. The student may use those funds to satisfy any outstanding institutional charges such as tuition, room and board, books, fees, etc. Once all outstanding institutional charges have been paid, any remaining funds must be refunded to the student with 14 days.

The Department monitors schools to ensure compliance with federal student aid program rules and regulations. Any school found to be out of compliance may be subject to sanctions including fines, liabilities, suspension or termination from the student aid programs.”

From the Department of Education:
"The Department of Education does not comment on the existence or substance of any proposed or ongoing oversight actions taken against institutions participating in the federal student aid programs."

Paine College Statement to Chris Thomas of WRDW (PDF)


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