NORTH ANDOVER - The U.S. Department of Education is investigating possible mismanagement of a federal education loan program that has been offered to needy students at Merrimack College.
Investigators are focusing on a five-year period ending in 2007 during the presidency of Richard Santagati, who retired from the post three years ago. Santagati presided over the Catholic college for 14 years.
Reached at his Andover home yesterday, Santagati said he didn't know anything about the probe. He said it sounded like it could be a bookkeeping question.
"I assume it turned up during a normal audit," Santagati said. "I have been gone about five years now and I have no idea what the issues are."
Merrimack College's current president, Christopher E. Hopey, announced the ongoing probe of the Federal Perkins Loan Program in a recent email to students.
"My administration first discovered this issue as part of our FY11 year-end review and is cooperating fully with the investigation," said Hopey, of Nashua, N.H., who took over as president in July of last year.
"The College has also begun its own review of the Perkins Loan Program. Both investigations have revealed that past practices are not adequate and in need of significant correction," he said.
"We have a moral obligation to do everything in our power to make right any problems that stem from this mismanagement, especially for our alumni and former students who were studying at Merrimack during the 2002-2007 period," he said.
There is no evidence that current students have been affected by the past mismanagement, according to Hopey.
But the college has established a special hotline (1-800-210-8695) that current students, parents and alumni can call if they have questions or concerns about their financial aid accounts being affected. The hotline will be staffed from 9 a.m. to 5 p.m., Monday through Friday.
"Based on the information we have now, we believe that any mismanagement was contained within the period of 2002 - 2007, the College will be performing a full forensic audit of the Perkins Loan Program to ensure this is the case," Hopey said in his email.
"Although the vast majority of our alumni are not impacted by this issue, we are informing all alumni of the situation. ... Finally, the College will be working with alumni and former students who have been impacted by this mismanagement and will to the best of our ability resolve any problems that have arisen as a result," the president promised.
Hopey's email did not reveal the scope of the investigation, the nature of the problems, the amount of money involved, the number of former students who were affected by the mismanagement of the student loan program or how they were affected.
"We don't have that pinpointed yet as we are in the middle of our internal review," Hopey's chief of staff Jeff Doggett said in an interview last night.
"I can't comment on the Department of Education investigation," Doggett said.
Officials at the U.S. Department of Education were unavailable for comment and did not return emails or telephone calls.
The college's Financial Aid Office administers the low interest loans funded by the federal government. The loans provided up to $5,500 per year for undergraduates last year and up to $8,000 a year for graduate students. Current annual tuition and room and board totals $44,125.
Doggett said the college first learned of problems in managing the loan program in late summer, while conducting an end of the fiscal year review.
"Our internal investigation started with the closing of our books, when we noticed some inconsistencies. At about the same time, the Department of Education reached out to us," Doggett said.
Soon after, the college hired a special team of consultants to run the Financial Aid Office, replacing the college's longtime financial aid director.
"We felt it was very important to reorganize and keep up with demands and needs of our students," Doggett said.
In the midst of the federal probe and the college's own internal investigation, Hopey decided it was necessary to make the investigation public for everyone in the Merrimack College community.
The college sent out letters to the 20,000 alumni in its network. The college's 2,100 students were all briefed in the investigations, too.
"We felt it was serious enough to inform all alumni, current students, faculty, staff and parents," Doggett said. "We wanted to be as transparent as we can in letting people know what's going on at Merrimack College," he said.
"About 50 to 75 alumni have called the hotline. Maybe a third of them just called to thank the college for being open and getting information like this out," Doggett said.
Hopey attempted to stress the potential positive fallout from the federal government's probe, vowing "that we will resolve this issue in such a way that makes us stronger as a community."
"Rather than focusing on this potential set back, I call upon you to concentrate on those significant successes we have had of late...," Hopey wrote.
"Since first discovering this issue, the College has successfully welcomed to campus the largest freshman class on record, achieved national ranking in both men's and women's sports, held the largest Homecoming Weekend in our history and has successfully completed our ten year self study accreditation visit," he said.
Staff writer Jim Patten contributed to this report
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