Monday, April 25, 2011
Morris Brown to settle $10 million in fed debt
Morris Brown College is expected to settle nearly $10 million in debt for pennies on the dollar in an agreement pending with the U.S. Education Department.
In the April 7 letter, obtained by The Associated Press, the Education Department said it will forgive more than $9.4 million in debt, provided Morris Brown pays the remaining $500,000. The deal would help the college overcome a major hurdle in its efforts to regain accreditation.
Morris Brown College President Stanley Pritchett said the settlement agreement could be finalized as soon as May 1 and that the payment would be due within 90 days of the signed deal. The letter, signed by Department of Education counsel Russell B. Wolff, says the agreement must also be approved by the Department of Justice.
Morris Brown College was founded by former slaves in 1881 and has roots in the African Methodist Episcopal Church.
Audits done by the Education Department of the college's finances for the years between 1999 and 2004 uncovered the debt.
The debt represents years' worth of unused federal aid that the school was supposed to return to the government. Typically, the government gives schools money at the beginning of the academic year for student aid and other purposes. When any of that federal money is left over at the end of the year — sometimes because fewer students than expected need assistance — a school is required to give money back to the government.
Morris Brown's current debt totals around $30 million. The school owes money to vendors and other creditors. Pritchett, who came in as interim president in 2008, says most of the debt is about a decade old.
With the loss of accreditation, the school has been ineligible for federal student aid and struggling to survive with a skeleton campus and enrollment. Today, the college has three majors — down from 48 — and 85 students, a shadow the 3,000 students Morris Brown boasted at the height of its enrollment.
Meanwhile, the school has teetered on the brink of extinction but has found a way to survive. The campus was nearly shuttered two years ago after the city demanded a $380,000 overdue water bill, but Morris Brown held two rallies to raise the money to settle the debt. Alumni have contributed hundreds of thousands of dollars to keep the school afloat.