Thousands of students at Argosy University still have no answer about where their financial aid money is or when they’ll get it, if ever.

Those who are in a position to give answers don’t seem to know, either.

The man now in charge of the school’s finances said in a court filing Tuesday that the millions of dollars in federal student loans owed to Argosy students aren’t “missing” — he just doesn’t have them.

But the U.S. Department of Education says it sent about $15 million in January, most of it just days before the receiver took charge of the school’s books. They’re awaiting answers on how that money was spent.

No one has offered the students much hope. And it’s not clear how or if the school can weather this financial mess and stay open.

At a town hall meeting Wednesday in Chandler, students peppered Charlie Dottore, of the receiver’s company, and state regulators with questions about where their money was, when they would get it and whether the school would close.

Twice during the meeting, Charlie Dottore referred to Argosy as the “Titanic,” referencing the infamous liner that hit an iceberg and sunk.

He offered students no clear timeline for receiving their money. And, while he said he hopes the school can stay open, he offered no assurances that it would.

The meeting followed weeks of uncertainty for Argosy University students, who are stuck in limbo as they await funds they use for basic expenses and try to continue studies at a school that no longer has its own campus in Phoenix. 

Over the past two weeks, Argosy students across the country have told The Arizona Republic they are waiting on thousands of dollars in financial aid overages.

On Monday, the U.S. Department of Education said it wouldn’t rescue the students by paying out their loan money, but it would offer loan forgiveness for this semester. 

The department has also warned that Argosy may lose access to federal financial aid programs, which would be a financial catastrophe for the school. 

Separately, two members of Congress have called on the department’s acting inspector general to investigate Argosy and its parent company, Dream Center Education Holdings. 

What the receiver says

The receiver’s attorney, Mary Whitmer, said in the filing that as receiver, Mark Dottore “never had the money” to pay students because the university was “severely cash-strapped” when he took over. 

Typically, funds for tuition and other expenses are sent from the federal government to a college, then the college pays out any money beyond tuition and fees to students to use for school expenses. Argosy students have not received the overages, which the school calls “stipends.” 

In total, the university has not sent $13 million in payments owed to students, Mark Dottore has said. Some students described missing rent payments, not buying groceries and taking out high-interest loans to get by. 

The lack of funds seemingly stems from the fact that the federal government placed Argosy on something called “heightened cash monitoring 2,” the receiver’s filing contends.

The department will place institutions on cash monitoring if the department believes a university needs more oversight of its finances. There are two levels of cash monitoring, and the second level is more extreme.

Under “heightened cash monitoring 2,” a school does not receive advanced payments from the department to give to students as disbursements. Instead, the school must pay students first from its own funds, then get reimbursed from the department. 

A host of problems could land a university on heightened cash monitoring, from accreditation issues to financial woes to administrative difficulties. 

So, under this status, Argosy would have had to pay out students the roughly $13 million they’re owed in financial aid overages first, then get that amount reimbursed by the department. 

But, Whitmer wrote, the receiver did not have enough money to do that and had only about $4 million on hand.

And because he couldn’t pay it all out, the department’s regulations say it has “no obligation to reimburse” the school, Whitmer wrote. 

“To put it bluntly, the payment of the student stipends is stalled over a ‘chicken and egg’ debate,” she wrote. 

Department says it sent Argosy money

The Department of Education has a much different take. 

In an email to The Republic, department spokeswoman Liz Hill said the receiver should have money to pay students.

“In fact, significant funds have been released from the Department since mid-January that should have been used to pay the existing unpaid credit balances owed to students,” Hill wrote.

Dottore was appointed receiver on Jan. 18. He has maintained he has never had the funds needed to pay out students.

But, Hill said, the department sent $580,000 on Jan. 13 and $12.5 million on Jan. 15, just days before Dottore was appointed.

The department also sent $2.5 million on Jan. 29, after Dottore was put in charge of the company’s finances, she said.

No funds have been released since Jan. 29, because the schools haven’t provided the department with the necessary paperwork, like student rosters, to release additional money, Hill said.

Hill also noted that Dottore wasn’t new to Argosy’s financial circumstances when he was appointed receiver. He served as a consultant to Dream Center Education Holdings, Argosy’s parent company, since October, working on the school’s financial issues and with regulators.

“Nevertheless, it appears that no plan was in place to ensure that student credit balances were paid in accordance with the regulations,” she wrote.

Sometime around Jan. 25, the department heard about the unpaid student funds and “immediately and repeatedly” told the receiver to pay the stipends, Hill said. The receiver assured the department he would pay them, but on Feb. 7 told the department they were still not paid, she said.

Since then, the department found that some of the funds drawn from the department in January may have gone toward paying some part of students’ financial aid overages, but the money was “primarily used to fund payroll and vendor expenses,” Hill said.

Little hope left for students’ money

The department and receiver are trying to solve the problem for the students who are owed funds, Whitmer wrote. 

Argosy, the receiver and regulators all are receiving “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,” Whitmer wrote.

But, at this point, “the hopes for a breakthrough have dimmed,” Whitmer wrote.

Still, Dottore is trying to “secure a workaround” that would allow the department to immediately pay out students’ money and allow them to focus on their studies, Whitmer wrote. 

Reach reporter Rachel Leingang by email or by phone at 602-444-8157, or find her on Twitter and Facebook.

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