Saint Augustine's University, a historically Black college in Raleigh, North Carolina, is facing a critical financial situation that could jeopardize its future. The university has recently entered into a concerning financial agreement with Gothic Ventures, LLP, securing a $7 million loan with an alarming interest rate and additional fees. This move has raised concerns among financial experts, who worry that the university's desperate attempt to open for the fall 2024 semester may have put its long-term viability at risk.

Securing a Lifeline, at What Cost?

A Loan with Steep Terms

According to the financial agreement obtained by ABC11, Saint Augustine's University entered into a $7 million loan with Gothic Ventures, LLP in May. The loan is intended to help the university pay off various debts, including those owed to the U.S. Department of Education, student refund checks, past due payroll and taxes, audits, and property insurance. However, the terms of the loan are highly concerning, with an interest rate of 24%, a 2% loan management fee, and a $75,000 due diligence and documentation fee. The university's main campus and off-campus properties have been listed as collateral for the loan.

Concerns from Financial Experts

Martin Eakes, the Chief Executive Officer of Self-Help Credit Union, has expressed his concerns about the loan's terms. Eakes approached Gothic Ventures' Managing Partner, W.H. Kip Johnson III, about lowering the interest rate to no higher than 9%, but his request has been denied. Eakes estimates that the loan has already accrued nearly $500,000 in interest in just under three months, a staggering amount that could further burden the already financially embattled university.

A Potential Lifeline Rejected?

Eakes has indicated that Self-Help Credit Union would be willing to step in and help Saint Augustine's University, but only if Gothic Ventures would agree to a more reasonable 9% interest rate. However, the managing partner has so far refused to do so, leaving the university in a precarious position.

Homecoming Celebrations Overshadowed by Ongoing Issues

As homecoming celebrations wrap up across the Triangle, alumni of Saint Augustine's University have noted that current students did not have the opportunity to participate in these festivities. This is just one of the many issues the university is facing, as it remains millions of dollars in debt and grapples with a host of other challenges.

Silencing Dissent: Non-Disclosure Agreements

ABC11 has also learned that staffers and faculty members at Saint Augustine's University are being asked to sign non-disclosure agreements (NDAs). These documents prohibit them from discussing audits, accreditation, and financial information with anyone other than their direct supervisors, department employees, and the university president. This move has raised questions about the university's transparency and its efforts to control the narrative surrounding its financial troubles.

A Clouded Future for the HBCU

The financial challenges facing Saint Augustine's University have cast a shadow over the institution's future. The high-interest loan, the potential loss of collateral, and the university's ongoing debt issues have left financial experts and the community concerned about the long-term viability of this historically Black college. As the university navigates these turbulent waters, its stakeholders, including students, faculty, staff, and alumni, await with bated breath to see if the institution can weather the storm and emerge stronger on the other side.