FIU is not the first school to face charges of misusing federal funds. Among others: Harvard and Johns Hopkins.
State officials are closely watching how FIU takes the hit. Under the terms of the settlement, FIU paid the government $2 million in February using profits from its bookstores, concession sales and other "auxiliary" revenue sources. The $9.5-million balance was paid in June (plus about $100,000 in interest) using a tax-exempt loan from Regions Bank at a below-prime 3.15% fixed rate. Closing costs were $25,000.
In an interview in September with the school's campus newspaper, The Beacon, FIU President Modesto Maidique said the university will make loan payments using the interest off short-term investments of its operating revenue. Under a new state policy, each public university in Florida is free to invest its funds as it chooses rather than collectively through the State University System. Typically, those investments have returned about 3% -- revenue the schools pump back into their general operating funds for academic and non-academic programming. But Maidique believes FIU can generate even better returns, 5% or more, allowing the loan to be repaid without affecting general operations or tapping donations. He says the loan will be paid off within five years.