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Argosy students stipends stalled —USDOE not obligated to reimburse

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Pago Pago, AMERICANN SAMOA — The federal court appointed Receiver, Mark E. Dottore, continues to be in discussions with the US Department of Education for a possible advance of $13 million under federal student aids so students of Argosy University can get their stipends paid, according to a report filed yesterday by Dottore's attorney.

According to the report, “the payment of the student stipends is stalled over a ‘chicken and egg’ debate."

Dottore was appointed last month as Receiver by the federal court in Cleveland, Ohio which is overseeing a complaint against Argosy’s parent-company, Dream Center Education Holdings (DCEH) LLC.

The court last week directed Dottore to file by yesterday a status report regarding the student loan stipends and/or the steps being taken to distribute the stipends.

The report explained that the student stipends are monies borrowed by students and used by them to pay for living costs and expenses while they are taking academic courses and studying at Argosy University campuses.

“For many — if not all — students, the stipends are critical necessities, as the students have already borrowed the money and they have no other source of income while they are studying,” the report states. “Moreover, the students have counted on this money to insure that they can focus effectively on challenging academics in their program degrees.”

The Receivership has never had the money to pay the student stipends because the receivership estate was “severely cash-strapped” when the Receiver was appointed and because of the schools’ “Heightened Cash Monitoring 2” status — which requires the Receiver to advance the student stipends and then seek USDOE reimbursement.

The report confirmed that the amount required to pay the student stipends is “roughly $13 million” and dismissed claims — filed in court and reported by other US news outlets — that the money to pay stipends is missing.

“To be clear: the money to pay the student stipends is not missing,”said the report, noting that under USDOE regulations, the receivership has to have on hand $13 million to advance to students, and then the USDOE reimburses the receivership.

“Because the receivership never had sufficient resources to pay the stipends, it could not advance the money,” and because the funds could not be advanced, the “DOE regulations state that it is under no obligation to reimburse.”

The report notes that the USDOE and Receiver have been in discussions since the Receiver’s appointment, and in earnest discussions since Feb. 7th — both looking for a way to rectify the matter for those who matter most, the students of these institutions owed these funds.

It also notes that the institutions, the Receiver, and state and regulatory agencies are fielding hundreds of calls a day from students facing eviction, impacted by repossession, unable to pay childcare, and unable to provide for their families as a result of these funds not being released.

“While the hopes for a breakthrough have dimmed, the Receiver is still attempting to secure a workaround under which the funds will immediately be released from the USDOE and to the students with the hope that easing the financial burden will allow them to return to their studies and focus on completing their degrees,” the report concluded.

Meanwhile, court records — as of yesterday — show that more parties — including US companies — have sought to intervene in the case.