U.C. Berkeley May Have Overcharged
U.S. $100 Million

WASHINGTON - If U.S. Rep. Thomas J. Bliley of Virginia is right, the University of California will be charged with illegally billing an estimated $100 million in graduate-student tuition to the government over the past decade.

According to The Chronicle of Higher Education, Bliley put the General Accounting Office to work after he learned of a sealed federal lawsuit filed in 1996 against the university system under the False Claims Act, which allows whistleblowers to sue on behalf of the federal government and share in any monetary damages awarded.

Claims filed under the Act will be sealed until the government completes an investigation, but a summary of policy issues addressed in the complaint was released May 21 by the Commerce Committee.

According to the summary, the lawsuit involves the University of California's free tuition program for graduate students, which allows students to attend school for free in exchange for their work on federal grants and contracts. The university then seeks reimbursement from the government for the program. The summary also states that the university simultaneously reports to the Internal Revenue Service that the tuition payments are student aid, not compensation - a move that allows the university to avoid paying Social Security taxes on tuition payments. As a result, the suit contends that the university has made an estimated $100 million in illegal tuition billings.

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To make matters worse, the summary also states that the university system allegedly charged student fees and non-resident tuition to those federal grants and that it also has given "free tuition" to students outside of the "limited circumstances" for whom the program was originally intended.

Rick Malaspina, a spokesman for the university, said the university has no record of receiving the false-claims lawsuit. He also maintained that six of the nine university campuses using the grant monies have done so legally and view the funds as the most effective way to retain good students. The other three campuses in the university system do not participate in the government program, he said.

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This page last updated 09/08/98.

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