Federal Student Loan Program Investigated at Maryland College

Posted by Shannon Rasberry on Nov 14, 2011 in Student Loan Scams & Scandals | 2 comments

The U.S. Department of Education is investigating Merrimack College over questions about the school’s administration of a federal student loan program that helps low-income students pay for college.

The Education Department launched a probe into Merrimack College, a small, independent Catholic school in North Andover, Mass., over possible mismanagement of its Federal Perkins Loan Program, a government program that provides low-interest education loans to needy students. Investigators say they are investigating a five-year period from 2002–07 during the presidency of Richard Santagati. Santagati, who presided over Merrimack for 14 years, retired in 2008.

Merrimack College’s current president, Christopher E. Hopey, announced that the school was being investigated in a recent email to students. “My administration first discovered this issue as part of our FY11 year-end review and is cooperating fully with the investigation,” Hopey’s email read. “The College has also begun its own review of the Perkins Loan Program. Both investigations have revealed that past practices are not adequate and in need of significant correction.”

Hopey said that the school believed that any mismanagement was contained in the period from 2002–07. He added that any mismanagement did not affect current students and that although the college was informing all alumni of the situation, “the vast majority of our alumni are not impacted by this issue.”

Hopey also said that the college would work with affected students to resolve any problems resulting from mismanagement of the school’s Perkins loan program.

The email did not discuss the scope of the Education Department investigation, the nature of the problem, the amount of money involved, the number of affected students, or how students were affected.

“We don’t have that pinpointed yet as we are in the middle of our internal review,” Jeff Doggett, Hopey’s chief of staff, said in an interview. “I can’t comment on the Department of Education investigation,” Doggett said. However, Doggett said that the federal probe began at the same time the college learned of possible mismanagement resulting from an end of the the fiscal year review in late summer (“Feds Probe Merrimack College Student Loans,” Eagle Tribune, Nov. 13, 2011).

Education Department officials were unavailable for comment.

In all, 20,000 alumni and 2,100 students were contacted about the federal investigation. Last year, the school’s Perkins loan program offered low-interest student loans up to $ 5,500 per year to undergraduates and $ 8,000 a year for graduates. Current annual tuition and room and board at the college totals $ 44,125.

For more information, current students, parents, and alumni can contact the college at a special hotline by calling (800) 210-8695 between 9 a.m. and 5 p.m., Monday through Friday.

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