WEST FRANKFORT — In a unanimous vote during a special meeting Tuesday, the Illinois Board of Higher Education appointed a hearing officer to oversee the possible revocation of Morthland College’s authority to operate and grant degrees.
In a seven-page report detailing a review IBHE conducted in September, concerns werer raised involving the financial stability of the institution, its relationship with sports academies and its record-keeping. The report provides evidence of numerous violations of higher education statutes.
“The first area of primary concern is the financial stability of the institution. Staff are not able to state that the College has the capacity to continue operations uninterrupted, serving all admitted students,” the report says of its September review.
Officials from the Illinois Board of Higher Education visited Morthland College on Monday after the U.S. Department of Education revoked the school's ability to access federal student aid funds and fined the college for an alleged "breach of fiduciary duty."
The report indicated that as of the review date, there had been no new enrollment for two consecutive terms and that all students enrolled were there on a full scholarship from the Morthland Foundation, which the letter says is bankrolling the institution.
A review of the college's financial records revealed “numerous overdrafts and returned checks.”
The report also questions the institution’s capacity to deliver the services a college is required to provide. There were three different organizational charts provided to investigators when asked about the college’s structure.
“Updated organizational charts were only produced after IBHE staff asked to speak with key administrative staff listed on the charts provided,” the report states. Staff also did not appear to possess the proper skill sets needed to perform their duties, according to the report.
“No members of the key administrative staff have the background and training to prepare them for their roles, nor was there an indication that any training or professional development was ongoing,” according to the report.
Regarding the college’s dealings with sports prep academies, the IBHE report indicates that Tim Morthland, founder and president of the college, said the college’s online students performed 10 percent above the national average, but a November 2016 snapshot provided in the report indicated that of the 107 students enrolled, 13 of the students had a GPA over 2.0 and “93 percent of students in that term were failing.” The summation was that Morthland College was admitting students not ready for college-level work.
The letter from the U.S. Department of Education that tipped off the IBHE investigation uses strong language to describe activities at Morthland College — a form of the word “illegal” is used multiple times in the 17 pages of that letter.
Top among the concerns was the way the college handled enrollment and financial aid for prep sports academy students.
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The letter was the result of a program review conducted by DOE in early 2017 that ended with the department placing the college on Heightened Cash Monitoring 2 status, forcing a temporary halt to Title IV student aid dollars flowing to the college. The letter, signed by Susan D. Crim, director of the department's Administrative Actions and Appeals Service Group, informed the college that an “emergency action” was being placed on it, with the intended result being complete termination of its Title IV fund availability.
“I have based this decision upon reliable information obtained during a review and investigation that was conducted by the Department’s Chicago/Denver School Participation Division,” Crim writes in the August letter.
Crim writes Morthland “repeatedly breached its fiduciary duty to the Department.”
“Morthland’s misconduct is exemplified by its illegal disbursement of Title IV funds to ineligible students, its improper retention of unearned funds when students ceased attending, its improper handling of Title IV credit balances, its use of an inflated cost of attendance, and its failure to meet Title IV institutional and program eligibility requirements,” Crim writes.
Crim's letter lays out a timeline for Morthland College’s relationship with several prep sports academies throughout the country for which the college provided online education. Tim Morthland has said in emails to IBHE that the college had no real relationship with these schools. But, the letter states that in 2016, Morthland enrolled more than 300 students from 12 prep academies into distance education classes.
The prep academies the college worked with take high school athletes that either need more game footage for scouts or work on their academic records and promise to help them be placed within college athletic programs.
Crim's letter says that the DOE's investigation revealed that when totaling the cost of attending Morthland College for online students, the college “inflated the tuition charges and included a significant cost for room and board at the various sports academies when calculating the students’ cost of attendance.” The letter alleges that the college did this to boost the amount of money students were eligible for, allowing them to pay tuition at the sports academies as well as Morthland College.
The letter also states documents reveal that many applicants were encouraged to take out large Parent Plus loans on top of their Federal Pell Grants and Direct Loans, some of which totaled as much as $18,000.
Crim writes that “... there was a clear attempt by both Morthland and the academies to circumvent the Title IV eligibility requirements and illegally obtain Title IV funds.”
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Crim writes that the way the college handled credit balances for these student loans was also questionable and at times flatly illegal. The letter states that “any credit balances created on a student’s account must be paid to the student or parent (emphasis Crim’s) within a supplied time frame.”
To get around this, Crim writes, Morthland created a “Financial Aid Delivery Method Waiver” form for students to sign. According to the letter, Morthland claimed this was for the benefit of the student, which Crim writes “is patently false.” She writes that the students provided their “local addresses” for delivery, but often the addresses were to the sports academies themselves, and in one specific case even to the home of one of the academy owners.
This created an opportunity for other illicit activity, she writes.
“Morthland’s actions also opened an opportunity for individuals from the sports academies to forge signatures on checks or to illegally deposit the checks without the student or parent endorsement,” according to the letter.
For both the DOE and IBHE actions, Morthland has the ability to appeal. It was unclear as of press time if the college was engaged in the appeal process in Washington. A media liaison for the college has not yet returned answers to the paper’s questions.
Candace Mueller, associate director of external relations for IBHE, said the hearing officer appointed Tuesday will hold a hearing, at which the college will be able to defend itself. The officer will then make a recommendation during the board’s June 5 meeting as to whether or not the school’s ability to operate and grant degrees should be revoked.
Mueller said revocation by the board is not common. In an emailed statement, she said the last time the board revoked operating and degree-granting authority from an institution was in August 2004.