The Michigan State Spartan logo on a building, photographed Aug. 31, 2020.
Michigan State University paid the Department of Education nearly $3 million in July after failing to meet federal requirements meant to provide special oversight of its financial and administrative affairs.
MSU is required to get federal approval for any new academic programs it creates before distributing financial aid, a provision the Department of Education placed on the university in 2019 after fallout from its handling of disgraced ex-MSU doctor Larry Nassar.
MSU’s failure to report and address the actions of Nassar, who sexually abused hundreds during his time as an MSU physician, violated the Clery Act and lowered its standing with the Department of Education. MSU's standing means the Department of Education can prevent the university from expanding academic programs if it isn’t making progress on improving campus safety like MSU promised it would do in 2019, an Education Department spokesperson said.
Despite the requirement, the university gave over $15 million in federal financial aid to around 800 students enrolled in 16 new academic programs without first getting the Department of Education’s approval for those programs.
Interim Provost Thomas Jeitschko told The State News that the university didn’t realize it was supposed to receive approval until December 2022, when administrators "discovered" the Department of Education's provisions.
Administrative turnover following the Nassar scandal caused administrators' ignorance of the federal rules, Jeitschko said.
"How did it come to this? The answer is, I don’t know," Jeitschko said. "All the people who were charged with compliance with the education department, the disbursement of financial aid, all of those people have turned over since the Nassar thing."
After MSU reported the error, the Department of Education opened a review into the university to determine whether the department was liable for the ineligible financial aid disbursements, according to a copy of the settlement obtained by The State News.
The Department of Education didn’t find any problems with the new programs, but asked MSU to cover the expected default rate for the federally subsidized student loans given to the students, a total of $2,761,502.
The university paid the amount on July 19, according to spokesperson Mark Bullion.
Jeitschko said there were 16 academic programs that went unreported:
Jeitschko said that the university has been very diligent about addressing compliance issues in the years since.
"We have new team members who have gone through things with a fine-toothed comb," he said.
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