The U.S. Department of Education has fined Chicago State University, $311,963, for providing federal grants and loans to 129 students from 2008 to 2011, who did not meet the university's academic standards.
Even though the university's policy states that students with a GPA below 1.8 be dismissed, students with 0.0 GPA were allowed to sign up for programs to increase their overall enrolments.
The department has blamed the university for not withdrawing such individuals from respective programmes and allowing them to receive financial aid from the institution.
The university has been held responsible for causing financial loss to Title IV programs or federal Pell grants and loans due to improper payment.
On the whole, the university has granted a total of $613,616 in financial aid to ineligible students.
However, the university has negotiated with the department for a reduction in the fine.
The department told Chicago Tribune that the university offered federal grants to five ineligible students in 2007-08 and increased that number to 57 students in 2010-11.
The department started reviewing these figures last fall and released its final report, Monday. The university has now 45 days to pay the fine.
Earlier, the university repaid $20,151 in state financial aid given to the same group of students.
University President Wayne Watson told the newspaper that granting financial funds started before he took over in 2009 and continued without his knowledge.
Watson said that he dismissed around 300 students and stopped providing federal funds immediately in 2011.
"We were transparent and worked to clear this up," Angela Henderson, the university's vice president of enrollment management, told the newspaper.
Universities are allowed to decide and develop their academic standards and determine whether a student is eligible for a program or for financial aid.
