Ohio Auditors Questioned 100% of a Closed College's Federal Aid

Ohio's state auditor disclaimed his opinion⧉ on Eastern Gateway Community College's finances for the year ended June 30, 2023 -- the harshest outcome a financial-statement audit can reach short of alleging fraud outright -- and questioned $17,283,586, 100 percent of the Steubenville college's Title IV student-aid spending for that year (Pell Grants and Direct Loans combined), because the college could not document who received the money or whether they were eligible for it.▸ The 44-finding report⧉, signed October 22, 2025 and publicly released⧉ November 25, 2025, arrived more than a year after the college it examines had already stopped teaching classes.

Eastern Gateway built its enrollment on tuition waivers: under agreements with public-service labor unions, the college waived tuition and most fees for more than 90 percent of its enrolled students⧉.▸ In fiscal 2023 the college's net tuition and fee revenue was just $7,943,416, after $251,456,330 in Pell and scholarship allowances -- and even the audit can't agree on what "gross" tuition and fees means: one finding treats the net figure as $251.46 million lighter than gross (implying roughly $259.4 million billed); a separate finding in the same report states outright that gross tuition and fees totaled $251,456,330. Either way, auditors found the waiver design itself broke federal rules: student ledgers marked the waived charges as an outside "last dollar scholarship," but investigators determined no outside entity was actually paying -- the college was simply writing the charges off and making it look otherwise, a form of disparate charging Title IV explicitly forbids.

The college's collapse shows up in its own numbers -- though not always the same way twice.▸ Cash, cash equivalents, and investments combined fell from $29.3 million to $4.0 million in a single year -- an 86.3% drop -- after the U.S. Department of Education placed the college under Heightened Cash Monitoring, a status that lets a school keep spending but forces it to document every dollar before requesting reimbursement rather than drawing funds in advance. Under that status, the college asked the Department for $31,239,361 in Pell Grant reimbursements for the year and received $16,980,279 -- the Department denied 45.6% of what the college requested. Total net position fell 64.7%, from $30.4 million to $10.7 million, a $19.7 million decline; the audit's own narrative text elsewhere claims the decrease was only $10.8 million, a figure that doesn't reconcile against the college's own beginning and ending totals in the same report. The general operating fund, meanwhile, ended the year $738,329 in deficit after administrators drained $10,889,443 out of the college's investments into checking, between October 2022 and June 2023, just to keep paying bills.

Separately, auditors found the college's former board of trustees authorized $13.6 million in bonds in 2020 -- issued in part to buy a parking garage in Youngstown -- after the former chief financial officer never gave the board or bond counsel an accurate appraisal of the property; the eventual cost of demolishing the garage exceeded the land's estimated value.▸ A $17,260 payment to an entity called the Union Education Trust had no supporting paperwork the college could produce, and auditors referred it to the Auditor of State's Special Investigations Unit. None of it was a surprise in hindsight: two findings from the college's 2021 audit -- over inaccurate enrollment reporting and late returns of unearned federal aid -- were still marked "Not Corrected" two years later, and the Department of Education's own reasons for placing the college under cash monitoring included employees paid by both the college and its outside financial-aid servicer, unusually high staff turnover, and "a clear lack of training and/or experience" handling federal aid.