Tiffin University and Altius Education Inc. are being investigated by the civil fraud division of the U. S. Department of Justice.
The investigation began last week and is to determine whether Ivy Bridge College, through a joint venture with Altius, violated federal student aid policies.
Ivy Bridge College is an online associate's degree program that was established in 2008.
The Higher Learning Commission of the North Central Association of Colleges and Schools, TU's accreditor, prompted the two entities to halt the venture and to end Ivy Bridge enrollment by Oct. 20.
The commission stated in its staff summary report, updated in July, the joint venture did not meet the commision's expectations through its Change of Control, Structure or Organization policy.
The policy was adopted in 2010, after the joint venture had been established.
TU President Paul Marion told the commission about Ivy Bridge in 2008.
In 2010, Tiffin received accreditation for Ivy Bridge as it finished a 10-year accreditation review.
When Ivy Bridge was created, the commission had no policy that covered the formation of a joint venture, according to the staff summary report.
The commission had then created a new policy governing a "change of control" before the 2010 review. Those rules require the commission's approval for the "sale or transfer of an institution's assets, release of an interest in an institution, or other transactions."
Those rules, which mirror the federal government's policies for financial aid programs, require colleges to get the commission's approval for the outsourcing of 25 percent or more of an academic program to an unaccredited entity, according to the report.
The program, Ivy Bridge, was created in order to reach more students and to reach an underserved population such as women with children, individuals at the poverty level, minority students, and adults with jobs and families, TU President Paul Marion said.
"This program provided a high quality experience for an underserved population to be able to get the first two years of college in a cost effective way," Marion said.
So far Marion said that the investigation prompted TU to provide all their student and financial aid records pertaining to Ivy Bridge.
"We are pleased to have the opportunity to demonstrate that all the rules and regulations were followed with the hights ethical and legal standards," Marion said. "There has been no allegations or charges. The Department of Justice has merely retained all records of the federal financial aid procedures."
The investigation advised TU and Altius that the inquiry is part of a False Claims Act investigation that could cover Ivy Bridge's student recruiting practices, academic integrity issues, and student loan policies as well as the corporate relationship between Altius and Tiffin.
According to Marion, TU was responsible for all academic programs and financial aid, registrar, bursar, tutoring and library functions of the joint venture. The business agreement with Atlius handled marketing, student recruitment, technology support, success coaching, among other services.
Students that had been enrolled in Ivy Bridge have been able to complete their degrees through Tiffin University and also have the opportunity to transfer into one of TU's bachelor programs or any other HLC accredited University.
"The students have not known the difference," Marion said.
Marion and CEO and founder of Alitus Education, Paul Freedman, both said they do not know what prompted the investigation, but Marion said that Tiffin University has no concerns.
Freedman said that it was unfortunate that Ivy Bridge ended. The college had a 66 percent transfer rate, with 3,900 transfers.
"When an Ivy Bridge student transfers to one of its 150-plus partner universities, that's a success, even if they haven't completed their associate degrees," he said.
The U.S. Department of Justice declined to comment.