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  • Front view of the Art Institute of Fort Lauderdale, Florida.

    Front view of the Art Institute of Fort Lauderdale, Florida. | Photo: WikiMedia Commons

Published 8 March 2019

The schools affected are Argosy University, South University and the Art Institutes, with students in programs ranging from associates degrees to doctoral programs.

About one year has passed since the controversial switch of ownership of dozens of college campuses from the struggling Education Management Corporation (EDMC) to the Christian nonprofit, Dream Center. The move has proven to be a shaky anniversary, as about 26,000 individuals are affected by the schools threatening to close, or hastily being sold, some as soon as Friday due to severe financial losses.

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The schools affected are Argosy University, South University and the Art Institutes, with students in programs ranging from associates degrees to doctoral programs. Fourteen campuses, consisting of eight Art Institutes campuses and six South University campuses, have already been sold to the nonprofit Education Principle Foundation.

The nonprofit was renamed three weeks before gaining ownership of the institutions, and is personally funded by Colbeck Capital Management, a New York-based private equity firm. Some 15,000 students at the institutions were informed by a news release that their respective campuses have been bought by a foundation, which is not yet a month old. The questionable deal has raised the eyebrows of Congress Democrats, who are urging the Education Department’s inspector general to look into the department’s involvement in the arrangement.

On Wednesday, Mark Dottore, the court-appointed receiver who has originally been hired by the Dream Center as a paid consultant, filed an emergency motion which states that any campuses that had not been sold by Friday would be closed.

The announcement comes after Dottore previously addressed students at Argosy University Chicago campus, in which he promised that “we will make it until June, I can pretty much assure you of that.” The motion gives institutions less than three days to scramble to find a buyer, or leave students with many non-transferrable credits to fend for themselves.

“In less than a month, everything I have worked for the past three years has been taken from me,” Jayne Kenney, a clinical psychology doctorate student at Argosy Chicago campus, said. Some students have been locked out of classrooms by an unpaid landlord, and even advised to avoid inviting family from out of state to attend their graduation ceremony.

Another harsh consequence students are facing, by no fault of their own, is not receiving the federal student loan refunds that they applied for to cover extra expenses, such as food and rent.

According to Dottore, US$13 million owed to students on 22 Argosy campuses had been used for operating expenses. Argosy had reported that the money was paid out to students when it had not been. The Dream Center has yet to respond to these accusations of alleged fraud. The Education Center cut off federal student loan funds to the institution, and has forgiven federal loan debt for affected students this semester, but students who paid out of pocket are not optimistic about getting their money back.

The Dream Center has done little to reverse sketchy practices that put EDMC in hot water, including those listed by several consumer groups and Congress members in a letter to U.S. Secretary of Education Betsy DeVos when the deal between EDMC and the Dream Center was still on the table. These include prioritizing growth over service, targeting inexperienced customers, spending more on marketing than instruction, gaming the student loan default rate, and arranging for students to take out additional loans despite the 42 percent expected to default due to their inability to repay them.

Around the same time DeVos approved the Dream Center’s plan, the Education Department had also reversed the Obama-era gainful employment rule, which would have held for-profit colleges accountable for graduates with poor job opportunities and crippling student debt.

The administration of former U.S. President Barack Obama implemented the rule after responding to complaints from students who said their degrees from the ITT Technical Institute and Corinthian Colleges were essentially worthless. The Dream Center had attempted to buy the failing ITT schools, but were unable to go against administration's rule, at the time.

DeVos claimed this restriction reversal would liberate these institutions. Some institutions were even allowed to convert to non-profits to avoid the already watered down regulations.

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Betsy DeVos

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