Officials at North Carolina Agricultural and Technical State University improperly funneled at least $780,000 to students with family, personal or professional ties to senior university leaders, a special investigative report from the state auditor’s office has found. The money came from $5 million in administrative “recovery” funds that were improperly used for student financial aid, the report states.
The state auditor, Dave Boliek, blamed the misspending on “lack of internal controls.” He also lambasted former senior officials who used their positions and influence to give preferential treatment to certain students, which resulted in personal advantage and gain. “Public university dollars that could have benefited other students or programs were instead directed toward those who had the benefit of having a personal connection with senior officials,” Boliek stated in the report.
The report recommends “stricter policies” for how scholarship funds are distributed and says university officials must do more to make sure university employees do not engage in conflicts of interest. It also urges the university to recover the misspent funds.
The bigger picture:
Few scandals can shake public confidence in a university like one that involves employees using their positions to treat the financial aid office like a trough. The situation can be particularly painful for HBCUs, which, according to a Bankrate analysis, are already at a “disproportionately high risk of losing access to federal financial aid due to widespread student loan defaults by former students.” Scandals like the one at N.C. A&T can make HBCUs’ financial condition worse by subjecting them to additional penalties that could curtail their access to federal aid.
For example, after Howard University fired six financial aid employees for fraud in a scandal that surfaced in 2018, the feds imposed cash monitoring sanctions that precluded the university from receiving financial aid until it disbursed financial aid to students. Howard University President Wayne Frederick indicated at the time that the sanctions followed an inquiry that started after the university’s financial aid scandal came to light, and students began to protest.
The state auditor’s report on N.C. A&T warns of similar consequences if the university doesn’t clean up its act. “If the University does not take corrective action, it could be at greater risk of additional misuse of funds, noncompliance with financial aid regulations, and reputational risk, leading to loss of public and private donor support,” the report states. N.C. A&T is not out of the woods yet. The report indicates that the matter has been referred to the North Carolina State Bureau of Investigation.
Dr. James Martin II, chancellor at N.C. A&T, vowed to contract with an external audit firm to perform an independent audit of the financial aid awarding process. The chancellor also committed the university to conduct “mandatory, formal training” for all financial aid staff. “This training will address applicable federal and institutional requirements, internal control expectations, ethical standards, documentation requirements, and proper approval protocols,” Martin’s letter states.
