You can't expect the U.S. government to fund any 'ole school, they need to cover their interests as well. If a school isn't very established and continues to have poor pass rates on board exams, why should the U.S. government give loans to their students because they may never end up paying them back.

However, AUC is established and has good pass rates. I don't understand why it would be beneficial to drop federal funding. It's not like they don't make a ton of money on interest.