Dream Center plans pullout from most Art Institutes
Pittsburgh campus to remain in its holdings
Dream Center Education Holdings, after shuttering 18 Art Institute campuses at the end of last year, has informed federal education regulators it plans to pull out from most Art Institute campuses and South University to avoid bankruptcy, according to federal education regulators and a state agency in Washington State.
Under the plan, Dream Center will keep the Art Institute of Pittsburgh, Art Institute of Las Vegas and the Argosy University campuses. Ownership of the other dozen or so Art Institute campuses that are still accepting students would be transferred to a nonprofit called Education Principle Foundation, based in Delaware.
Any change in ownership requires approval from the U.S. Department of Education and regional accreditation agencies.
The Dream Center Foundation, a Los Angeles-based nonprofit that runs charitable services nationwide, agreed to purchase the nationwide Art Institute chain, South University and Argosy University in a $60 million deal with Pittsburgh-based Education Management Corp. in March 2017. EDMC, a for-profit education company, is liquidating in bankruptcy.
But the schools’ management team has run into financial trouble, according to a recent letter to the Northwest Commission of Colleges and Universities, a regional accreditor based near Seattle.
“It was expected that the new nonprofit status and management through the Dream Center entity would yield improvements to the financial and operational stability
of AI Seattle and other Art Institute campuses,” the letter stated. “Unfortunately, based on the vast amount of debt that Dream [Center] inherited from EDMC, Dream [Center] has been challenged to stabilize the institutions.”
The Dream Center Education Holdings is “at risk of becoming financially insolvent and is now working with the United States Department of Education to reorganize AI Seattle and the existing Art Institute campuses to preserve their ongoing operations.”
That disclosure led the Washington Student Achievement Council, a state agency overseeing higher education, to declare the Art Institute of Seattle “at risk” of closure on Friday.
On Monday, the council suspended the school’s license to operate, which indefinitely blocks the enrollment of new students.
The council will reinstate the license when Dream Center presents evidence to show it has “regained financial solvency or completed a viable reorganization.”
“Any institution that operates in Washington has to demonstrate financial stability to recruit and enroll students,” said Don Bennett, the council’s deputy director, in an interview.
Little information could be found on the ownership of Education Principle Foundation, and Dream Center did not elaborate in its letter.
Dream Center has not publicly commented on the status of the schools since the acquisition and could not be reached for comment for this story.
A spokesperson for the U.S. Department of Education confirmed the reorganization.
“In early January 2019 most of the Art Institutes and all of South University became independent organizations that are managed by their own boards of trustees,” the spokesperson wrote in an email. “DCEH no longer has an ownership position in these institutions, nor does it have a role in the administration or oversight of those institutions.”
It is unclear whether other Art Institute campuses have informed regulators in other states of the push to reorganize the nearly 100-year-old arts trade school chain. Pennsylvania education regulators could not respond to a request for comment in time for publication.
The apparently dire financial situation could be one reason the schools have faced pushback from accreditors over the last year.
The Middle States Commission on Higher Education, a Philadelphia-based regional accreditation agency, has threatened to withdraw accreditation from the Art Institute of Pittsburgh — a move that would effectively disrupt any plan to build more online courses.
Middle States is scheduled to meet again in March to consider whether to remove accreditation. Middle States could not return a request for comment on Monday in time for publication.