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'Egregious failure': Union Institute loses federal aid, fined millions for misuse of funds

Union Institute & University Headquarters in Walnut Hills
Zack Carreon
Union Institute & University headquarters in Walnut Hills.

Union Institute & University's days may be numbered after losing its access to federal financial aid on Monday and receiving a nearly $4.3 million fine from the U.S. Department of Education for several violations.

Since the beginning of the year, the Cincinnati-based university has failed to consistently pay its employees and give many of its students their federal loan refunds.

Earlier this month, the Department of Education informed Union Institute it would take emergency action and terminate the school's eligibility to participate in federal aid programs. That means all students attending the university will have to pay out of pocket to stay enrolled. Schools that have received a similar penalty — like ITT Technical Institute — closed soon after. Union Institute had the opportunity to appeal the emergency action and fine by this Monday, but the department has not yet said if the university has done so.

RELATED: Union Institute students and staff have little confidence as school faces sanctions, investigations

The department claims immediate action became necessary to prevent further misuse of funds after it analyzed multiple complaints from students and staff along with documents provided by Union Institute.

According to a letter sent by the department to Union Institute & University President Karen Schuster Webb, the school committed "serious, ongoing violations of Title IV regulations," including using federal student aid money to pay off delinquent debts.

The letter goes on to describe the poor financial and educational conditions at the university, calling Union Institute's handling of federal dollars an "egregious failure to protect UIU students' Title IV funds."

Union Institute has not held classes for undergraduate students this fall due to a lack of money and staff. Some students in the school's graduate and Ph.D. programs have been able to continue working on their degrees because all communication with instructors happens online. Still, based on this information, the Department of Education says due to widespread resignations among faculty and in its business office, Union has stopped providing many, if not all, the educational services and instruction promised to students.

No employees have been paid since August and the school owes nearly $450,000 in back rent for its headquarters in Walnut Hills. Employees say Union Institute was first locked out of its headquarters in August and were officially evicted from the building recently.

More than $753,000 in federal dollars is owed to 157 students which Union has apparently been unable to pay because it neglected to properly identify accounts containing federal funds. Because of Union's debt, a third party placed a lien on UIU's bank account, taking $200,000 worth of federal money intended for students.

RELATED: Faculty call for investigation into management at Union Institute

On top of all this, Union Institute has not paid its annual dues to its accrediting agency, the High Learning Commission (HLC).

In early October, the HLC sent a letter to Union informing the school that it was not in compliance with the "obligations of membership," because of their inability to respond to complaints submitted against the institution.

Union Institute was also required to submit a provisional teach-out plan so students could transfer their credits to other schools, but it also failed to do this as well.

HLC's website shows the Union Institute is still an accredited university, though its status is still up for review. The accrediting agency went over the school's finances in late October to determine whether to change its status. A spokesperson for HLC says this process can take several months.

Union Institute & University's website is still inviting students to apply for its next term set to begin in January 2024, though students and staff who have spoken with WVXU expressed little confidence this will actually happen.

For now, faculty say they're demanding university leadership make a definitive decision about the upcoming term and present a teach-out plan by Dec. 1 so students can more easily transfer.

As many students await such a plan from the university, others who are close to finishing their degrees tell WVXU they plan on finishing their programs before the end of the year. Whether they'll actually receive a diploma from Union Institute remains to be seen.

Zack Carreon is Education reporter for WVXU, covering local school districts and higher education in the Tri-State area.