As the investigation continues into how Eastern Gateway Community College utilizes its Free College Benefit Program, the U.S. Department of Education placed a new restriction on the how the college can receive federal funding.

Monday, the DOE transferred Eastern Gateway Community College from an Advanced Payment method for Pell Grants to a Heightened Cash Monitoring 2 (HCM2) status. That means EGCC can't request the Pell Grant money first before dispursement, instead, the college will credit the students the money and then request reimbursement from the government.


In a letter to EGCC President Michael Geoghegan, the Department says it has taken this action as a result of serious and systemic issues identified during the ongoing program review conducted at EGCC. Those issues include the institution's general accounting records containing serious discrepancies and inadequate internal controls.


In July, the DOE ordered EGCC to stop dispursing Federal Pell Grant money to any new students enrolling in the Free College Benefit Program until it was redesigned.

The DOE determined EGCC was waiving tuition and fees for students in excess of Title IV funds. For students not receiving Title IV funds, the entire tuition and fees were waived. They say that resulted in Title IV students being charged for their education and non-Title IV students not being charged, which violates Title IV requirements.

EGCC disagreed with that analysis and believes the program is fully compliant with federal law but still suspended the program on July 27th to restructure it.

In a letter to faculty and staff today, August 10th, President Geoghegan stressed that the recent action in moving the college to the HCM2 status does not impact the college's ability to receive Pell Grants from students for tuition and fees and will have no impact on students themselves. Geoghegan says the biggest impact will be on the Financial Aid Department and an adjustment in timing of cash flows in receipt of Pell Grants.

"Let me emphasize that while the HCM2 directive is a setback, it will not affect our ability to continue to receive Pell funding," Geoghegan said. "There will be some changes in the timing of our cash flows from Pell but nothing we cannot adjust to."

The Department of Education is giving EGCC an opportunity to submit a proposal for restructuring the Free College Benefit Program and Geoghegan says they were submitting that proposal today.