CHARLESTON, W.Va. -- Federal education officials will keep a closer eye on how Mountain State University hands out millions of dollars in federal financial aid to students, after the private school lost its accreditation earlier this month.
On Thursday, the U.S. Department of Education placed Mountain State on "heightened cash monitoring" for its federal financial aid program.
That means that MSU won't get its Title IV funds before giving that money to students. Instead, the federal government will now release funds to MSU only after school officials say which students are getting how much money.
The increased federal oversight was triggered when the Higher Learning Commission, the regional monitoring agency that accredits MSU, withdrew MSU's general accreditation last week, citing the school for breakdowns in leadership, program oversight and student relations.
Typically, the federal government electronically transfers federal financial aid money to a university's bank account and it is then up to the school to dole out that money. Now that MSU is under increased federal scrutiny, that process has changed.
MSU must now specifically identify the students who need financial aid reimbursement and prove in writing to the Department of Education that each student included in the request for funds is eligible to receive and has received federal financial aid.
During the 2009-10 school year, 3,376 undergraduate students at Mountain State -- 64 percent of the school's students -- received federal student loans for a total of more than $35.2 million -- an average of $10,452 per borrower, according to the U.S. Department of Education.
The U.S. Department of Education's review of MSU's financial aid program comes one week after the Gazette-Mail obtained an audit from the West Virginia Higher Education Policy Commission that said MSU administrators had never paid dozens of students more than $50,000 in state financial aid.
The HEPC reviewed Mountain State's financial aid records from 2010 to 2012 and found that the Beckley-based school's financial aid office was plagued with disorganization.