6 Private Schools Dropped From Student Aid Program

The California Student Aid Commission announced Thursday that it has suspended six private California vocational schools from the state’s student loan program because of mismanagement of funds and other abuses totaling nearly $1 million.

Samuel Kipp, executive director of the commission, said the terminations were “the latest steps in a crackdown begun last year by the commission on schools and borrowers who fail to live up to their legal obligations.”

“Guaranteed student loans are the single largest source of financial aid for California’s college, university and other post-secondary education students,” Kipp said. “The commission cannot permit those few schools, lenders or students abusing the program to jeopardize educational loans for the majority.”

Commission spokesman Greg Gollihur said the commission, in conjunction with local district attorneys, is also investigating 34 cases of possible criminal fraud in the loan program, 29 involving individual borrowers and five involving schools.

Termination from the loan program could have a severe impact on the six schools. At least 75% of the students at each school receive some form of financial aid, and cutoff from the guaranteed loan program would make it much more difficult to attract students.

The six schools suspended from the program were North County College of Escondido; Cabrillo School of Nursing, which has campuses in San Diego and Chula Vista; Future Technical Institute, with campuses in Inglewood and Westlake; Continental Beauty College of Sacramento; Calwest College, a dental-assistant training school in Fresno, and the University of Cosmetology in Compton.

Gollihur said they were suspended for two basic reasons. All six, he said, had failed to pay refunds owed to students who had dropped out, with the total of unpaid refunds ranging from $10,000 at North County College to $327,000 at the Cabrillo School of Nursing. The combined total for the six schools was $481,472, he said.

He said the other reason four of the schools--Cabrillo, Future Technical, Continental Beauty and Calwest--were disqualified was essentially for faulty record-keeping. They had certified many students to be eligible for guaranteed student loans, he said, but were unable to document that eligibility when the school’s books were audited. Future Technical Institute had $398,742 in such “ineligible loans,” and the three others had a total of $83,000.

‘Gross Maladministration’

Future Technical Institute was singled out for “gross maladministration” of its student aid program. “Approximately 70% of the school’s loan portfolio may be ineligible due to lack of required records,” Gollihur said.

Attempts to get a comment from Future Technical Institute were unavailing Thursday afternoon. There was no answer at the Inglewood campus, and a tape machine at the Westlake campus said that no one was in.

Officials at Cabrillo, Continental Beauty College and Calwest declined to return calls seeking comment. There was no answer at North County College, which has filed for corporate reorganization under the protection of federal bankruptcy laws.

‘Doing All I Can’

Barnett Woods, owner of the University of Cosmetology, said he planned to appeal the commission’s decision. “I’m doing all I can to make those refunds,” he said, referring to $33,072 the school owes. Woods said in a telephone interview that he hoped to repay the money by the end of the year.

The school can appeal the commission’s decision to an administrative law judge or to the federal government, because the U.S. Department of Education is the ultimate guarantor of the loans.

Gollihur said some of the schools could be readmitted to the program if they pay the refund money they owe. However, he also said that several of the schools would also have to provide missing information and demonstrate that they are able to properly administer the financial aid program.