EDMC completes $60M sale of schools to foundation
Education Management Corp., a for-profit education company based in Pittsburgh, said it has completed the sale of 31 Art Institute schools and two other educational systems to the Dream Center Foundation.
The $60 million transaction, proposed in March, includes faculty and staff at all EDMC schools currently accepting new students. That includes the Art Institutes, Georgia-based South University and California-based Argosy University. It also includes a majority of the employees from EDMC’s corporate offices.
All told, the proposed deal will shift roughly 60,000 students and 15,000 employees at schools managed by EDMC to the Dream Center, a Los Angeles-based philanthropic organization affiliated with a Pentecostal church that funds programs across the country for underprivileged people.
“We are pleased with the close of this transaction and our attention remains with the students still enrolled in EDMC schools,” EDMC president and CEO Mark McEachen said in a press release on Tuesday. “We will honor our commitment to them and will continue providing them with the quality education they have come to expect from EDMC.”
The deal raised significant
backlash from critics who questioned how the Dream Center would manage the schools. Dream Center funds programs ranging from hunger relief and human trafficking shelters to transitional housing and job training services for homeless families — but it has no experience in managing higher education.
In June, the regional accreditor for the Art Institute of Pittsburgh and Art Institute of Philadelphia rejected the sale because of “insufficient information and evidence.” The Philadelphiabased Middle States Council on Higher Education said it will reconsider EDMC’s proposal at its November meeting.
In addition, regional accreditors for South University still have to approve the sale.
Yet, the U.S. Department of Education gave its blessing for the sale to move forward in September, and accriedtors for Argosy Universityhave approved it.
EDMC acknowledged in a press release that “certain schools will remain part of EDMC until they, too, are acquired by The Dream Center Foundation within the next several months.”
EDMC will remain as a for-profit corporate entity, headquartered Downtown on Fifth Avenue, to manage the winding down of nearly four dozen schools across its system that have stopped accepting new students. EDMC, founded in the 1960s, has been battered in the past decade by allegations of predatory recruiting practices that saddled students with debt.
With the closing of the sale, Dream Center will face immediate challenges of howto reverse falling enrollment and put the schools on a profitable path. It has created a separate nonprofit called Dream Center Education Holdings, LLC that will manage the schools and has installed two longtime education investors, Randall Barton and Brent Richardson, as chairman and chief executive officer.
In a letter sent to employees on Tuesday, Mr. Richardson wrote that the organization is “rounding out our leadership team” and is “looking forward to introducing them to you in the near future.
“Today is the start of a new beginning,” he wrote.