United Education & Software Inc., an Encino operator of trade schools, said Wednesday that a state review of student aid programs at its schools revealed mistakes that could cost the company an estimated $451,251.
UES's potential liability was estimated by the California Student Aid Commission, which is conducting the review. However, the company emphasized that the review's results were preliminary and that the amount of money actually owed by UES, if any, could be lower once the review is completed.
"We believe the final amount will be substantially less as past reviews of our schools have always resulted in similar non-material liability," UES President Aaron Cohen said in a statement.
"We also intend to correct any and all deficiencies in management controls over our financial aid processes identified" by the commission, he said. The commission, on behalf of the federal government, guarantees student loans made by private financial institutions such as banks.
Lengthy Review Possible
The review, which covered 15 UES schools, showed that some student aid refunds were late, incorrect or unpaid; that some students got more money than they were eligible for, and that some students were incorrectly granted leaves of absence, which could have automatically suspended their need to repay their loans, said commission spokesman Dan Parker in Sacramento.
Depending on how the loan was structured, UES could be liable to refund money either to the students involved, the banks or other financial institutions that usually make the loans, or to the federal government if it guaranteed the loans, Parker said.
Completion of the review could take several more weeks because the commission first will evaluate efforts by the schools to fix the problems, UES quoted the commission as saying.
There are 20 UES schools in California, most under the Pacific Coast College name, and the company also processes student loans for financial institutions. About 90% of UES students receive financial aid.
The commission previously has said such student aid reviews are routine for the 700 universities, colleges and trade schools that are part of its guaranteed-loan program. But the review of publicly held UES has has been damaging for the company's stock, nonetheless.
Following UES's announcement, the stock closed at Wednesday at $6.875 a share, down 25 cents, in over-the-counter trading.