Winston-Salem State to repay $1.15 million

WINSTON-SALEM -- A public university says it will repay the government and lenders more than $1 million for loans and grants given to ineligible students.

Winston-Salem State University said it would repay $1.15 million over the next three years, the Winston-Salem Journal reported Monday.

A review team said the university owes $710,855 to the U.S. Department of Education and $437,901 to lenders of subsidized loans. The review was prompted in 2006 by a tip to the Department of Education.

At issue were students who got $1.15 million in aid, then dropped out and didn't tell the university. The review said the university had difficulty tracking students who withdrew from classes. It also said the university's academic standards weren't stringent enough to meet federal rules for student aid.

"It's behind us, and we're going to move on," said Donald Reaves, who became chancellor in August 2007 about a year after the review began.

A plan is being arranged with the federal government to make a down payment and monthly payments of $16,000 to $17,000 for three years, Reaves said.

University spokesman Aaron Singleton said the school plans to pay the private lenders in one payment from a discretionary fund of about $1 million.

The repayments come when the university is experiencing other budget pressures, including a $1.5 million deficit in its athletic budget and a mandate from Gov. Mike Easley to return 2 percent of its budget to the state.