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Online community college deal catches Ed’s attention

On Monday, the US Department of Education weighed in on Eastern Gateway Community College in Steubenville, OH. In short, Ed is not amused by EGCC’s online community college operation. The agency is investigating the use of federal financial aid by a partnership between EGCC and the Student Resource Center (SRC), a for-profit online program management (OPM) company. EGCC’s students are overwhelmingly members of local labor unions associated with the AFL-CIO and AFSCME.

The unions offers “free” tuition to their members, delivered primarily by EGCC and a few other online educational institutions. As with most “free” college tuition programs, the benefit is a “last-dollar” program. To access the benefit, students must apply for federal financial aid first, and the benefit program picks up any remaining costs.

Last November, the Higher Learning Commission informed EGCC that the agency had serious concerns about EGCC’s academic quality. The HLC shifted EGCC’s accreditation status to probationary and gave EGCC 24 months to correct what the HLC characterized as serious deficiencies. Among the HLC’s long list of complaints were a student-to-faculty ratio of nearly 50:1, EGCC’s declining educational quality, and the level of influence the SRC appears to maintain over the academics at the online community college.

Financial aid at core of online community college investigation

The Department of Education, however, is primarily concerned with the financial relationship between EGCC and SRC. Driving enrollment to EGCC is critical to SRC’s business plan. EGCC has a 50% profit-sharing agreement with the SRC for online community college students. In the last few years, EGCC’s enrollment has mushroomed. The college now serves nearly 50,000 students, fewer than 2,000 of which are in-district.
In response to the influence of the SRC on EGCC, the Ohio Legislature changed the state’s community college funding model to exclude funding for out-of-state, online students. The move effectively minimized the state’s funding commitment to EGCC. With limited state funding and a limited local student body, EGCC is now almost entirely dependent on online enrollment for revenue. In 2020, EGCC earned about $7M from the arrangement.

Twenty-four months is not a lot of time to correct the substantial problems that the HLC found. Additionally, EGCC could be facing much deeper problems if Ed’s investigation turns up serious financial irregularities related to the use of federal financial aid. Ed could bar EGCC students from receiving federal student loans, which would upend EGCC’s financial strategy. That would also impact the HLC’s accreditation decision.

Online community college discounts are shortsighted

One could argue EGCC’s strategy to transform itself from a public institution to an online community college. Currently, fewer than 5% of EGCC’s students come from its local district. By itself, that raises questions. Why should a community underwrite a community college if 95% of the students come from elsewhere?

It’s a serious question, and one that’s closer to Washtenaw County than many people appreciate. Currently, about half of WCC’s enrolled students come from out of district. Based on enrollment figures reported to the US Department of Education, most – but not all – of WCC’s out-of-district students come from Michigan. But the WCC Administration has designs on vastly increasing the number of online students. To encourage online community college enrollment, the WCC Administration has significantly discounted the cost of tuition. It’s nearly identical to in-district tuition.

That raises the question, “Why should the taxpayers of Washtenaw County underwrite a community college that has such a large proportion of out-of-district students? More importantly, why should we educate these students at a discount?

One of the benefits of living in a community college district is that we have a lower cost of attendance. Offering in-district tuition to non-resident students eliminates the incentive for outlying areas to join the community college district. By enrolling a few thousand out-of-district students at a deeply discounted tuition rate, the WCC Administration is foregoing literally tens of millions of dollars in annual property tax revenues that it could potentially collect from residents in neighboring counties.

The current WCC Administration and its Board of Trustees are not protecting the financial interests of Washtenaw County taxpayers. We deserve better than this.

Photo Credit: Alliance for Excellent Education , via Flickr