New lender offers lifeline to St. Aug, but only if it ousts former chairmen from board

Saint Augustine's University is shaking up its leadership as part of a deal with an investment group providing a financial lifeline to the beleaguered Raleigh institution — a deal that also offers protection to the school’s valuable Raleigh property against debt claims.

Self-Help Venture Fund, a partnership involving a high-profile fair-lending advocate, agreed last week to take over millions of dollars in debt owed by the university, which has been grappling with falling enrollment amid a battle over its accreditation and findings of weak controls over financial reporting. 

The deal is expected to help address immediate financial obligations and help pay employees, according to messages from university leaders obtained by WRAL. As a condition of the deal, the lender asked for the removal of former Board of Trustees chairmen who were still serving on the board in emeritus roles, according to financial proposals obtained by WRAL. 

The university on Wednesday acknowledged changes in university leadership but declined to offer specifics. “The university has implemented governance and leadership updates and is advancing a comprehensive financial health strategy with the support of experienced partners,” spokesperson Demarcus Williams said in an email.

He added: “Board, executive, and academic leadership are firmly in place, and the university is advancing a strategic approach focused on institutional stability and sustainability, with the support of experienced partners, including Self-Help.”

As of Wednesday, Brian Boulware and James Perry — past chairman who had remained on the university’s board after their terms had ended — were not listed as members of the board of trustees on the university website. 

Boulware told WRAL Wednesday that he hasn’t been notified of any removal and was trying to get answers himself. Perry told WRAL his term had expired. 

Sitting board Chairwoman Sophie Gibson, who didn’t immediately respond to requests for comment, supported the new deal and urged the board to approve it. “History will record what this board did — or failed to do — at this moment,” she wrote to board members in an email obtained by WRAL. “I trust that each of you understands the weight of that responsibility.”

Financial lifeline

The university and Self-Help executives declined to disclose final financial terms of the deal. 

Wake County records show that Self-Help assumed at least $7 million in debt that the university owed to a unit of Gothic Ventures, a North Carolina group that has provided financing to the university in recent years. 

A Self-Help financing proposal obtained by WRAL indicates that the new deal could be much bigger. The November proposal indicates that Self-Help offered up to $30 million in financing to cover debt and tax liabilities. The group said it would consider an additional $20 million in financing in the future.

The new lender is led by Martin Eakes, one of the cofounders of Durham nonprofit Self-Help Credit Union, a financial institution focused in part on lending to higher-risk businesses and those that otherwise have been left out of the financial mainstream. Eakes, who declined to comment for this article, had criticized the initial $7 million Gothic loan when it was issued in 2024, calling the terms of the deal predatory — particularly its interest rate and collateral terms that Eakes said put the school’s property in jeopardy. 

The Gothic deal raised questions over whether the university had the wherewithal to pay it off — raising speculation over what might become of the university’s campus, which sits in the middle of a developing section of Raleigh, near the capital city’s downtown core. The university would have been forced to transfer all of its property to Gothic if it were to default on its debts under the old loan.

The Gothic loan came with an interest rate of at least 24% — considerably higher than typical commercial or institutional loans. Self-Help in November proposed an interest rate of 9%, eliminates certain fees and institutes no penalty for prepayment. The proposal also puts the university’s land in a trust that protects it from debt claims. It also requires the school to provide monthly financial statements to Self-Help.

Kip Johnson, a Gothic partner, didn’t immediately respond to a request for comment on Wednesday. He previously defended the loan terms to WRAL. “While we hoped that the government or a foundation or a bank would provide the funds necessary to keep the University open, that did not happen,” he said in 2024. “…The interest rate was based on the financial challenges facing the university.”

Financial risks 

Lenders typically assign higher interest rates to risky borrowers. And Saint Augustine's likely presents more risk than a typical commercial or institutional borrower. The 159-year-old university has been struggling financially due in part to falling enrollment — a situation likely exacerbated by a battle to retain its accreditation. There were about 200 students enrolled in the university during the 2024-25 school year — down 81% from two years earlier. A recent audit found weakness in its controls over financial reporting. 

The situation has in part put the university’s accreditation in jeopardy. The Southern Association of Colleges and Schools Commission on Colleges removed the university from membership in July. But the university remains accredited through its appeal process. Loss of accreditation would likely lead to more losses. 

Schools must maintain accreditation by a nationally recognized accrediting agency, like SACSCOC, to participate in federal student aid programs. Students cannot receive federal financial aid when a school loses its accreditation.

The university said it has taken deliberate steps to strengthen leadership and long-term financial planning. It held its 2025 fall classes virtually but plans to hold the 2026 spring semester in person, with Jan. 7 scheduled for the first day of classes.

The new financing deal may have required approval from the North Carolina attorney general, which had previously raised questions about the university’s prior financing. A spokesperson for Attorney General Jeff Jackson didn’t immediately respond to a request for more information about the office’s involvement.