Mil­lions in stu­dent loan cash dis­ap­pears as an in­ex­pe­ri­enced col­lege chain crum­bles

The Buffalo News - - FRONT PAGE - By Stacy Cow­ley and Erica L. Green NEW YORK TIMES

When the Ed­u­ca­tion Depart­ment ap­proved a pro­posal by Dream Cen­ter, a Chris­tian non­profit with no ex­pe­ri­ence in higher ed­u­ca­tion, to buy a trou­bled chain of for-profit col­leges, skep­tics warned that the char­ity was un­likely to pull off the turn­around it promised. What they didn’t fore­see was just how quickly and cat­a­stroph­i­cally it would fail.

Barely a year af­ter the takeover, dozens of Dream Cen­ter cam­puses are nearly out of money and may close as soon as to­day. More than a dozen oth­ers have been sold in the hope they can sur­vive.

The af­fected schools – Ar­gosy Univer­sity, South Univer­sity and the Art In­sti­tutes – have about 26,000 stu­dents in pro­grams span­ning as­so­ciate de­grees in den­tal hy­giene and doc­toral pro­grams in law and psy­chol­ogy. Four­teen cam­puses, mostly Art In­sti­tute lo­ca­tions, have a new owner af­ter a hastily ar­ranged trans­fer in­volv­ing pri­vate eq­uity ex­ec­u­tives. More than 40 oth­ers are un­der the con­trol of a court-ap­pointed re­ceiver who has ac­cused school of­fi­cials of try­ing to keep the doors open by tak­ing mil­lions of dol­lars ear­marked for stu­dents.

The prob­lems, aris­ing amid the Trump ad­min­is­tra­tion’s broad ef­forts to dereg­u­late the for-profit col­lege in­dus­try, be­gan al­most im­me­di­ately af­ter Dream Cen­ter ac­quired the schools in 2017. The char­ity, started 25 years ago and af­fil­i­ated with a Pen­te­costal megachurch in Los An­ge­les, has a na­tion­wide net­work of out­reach pro­grams for prob­lems like home­less­ness and do­mes­tic vi­o­lence and said it planned to use the schools to fund its ex­pan­sion.

Now its stu­dents – many with cred­its that can­not be eas­ily trans­ferred – are stuck in a melt­down. On Wed­nes­day, mem­bers of the fac­ulty at Ar­gosy’s Chicago and North­ern Vir­ginia cam­puses told stu­dents that they had been fired and in­structed to re­move their be­long­ings. In Phoenix, an un­paid land­lord locked stu­dents out of their class­rooms. In Cal­i­for­nia, a dean ad­vised stu­dents two months away from grad­u­a­tion not to in­vite fam­ily to at­tend from out of town.

“In less than a month, ev­ery­thing I have worked for the past three years has been taken from me,” said Jayne Ken­ney, who is pur­su­ing her doc­tor­ate in clin­i­cal psy­chol­ogy at Ar­gosy’s Chicago cam­pus. “I am also con­scious of the fact that what seems like the swift fall of an ax in less than one month has in re­al­ity been fes­ter­ing for years.”

The fall ac­cel­er­ated last week when the Ed­u­ca­tion Depart­ment cut off fed­eral stu­dent loan funds to Ar­gosy af­ter the court-ap­pointed re­ceiver said school of­fi­cials had taken about $13 mil­lion owed to stu­dents at 22 cam­puses and used it for ex­penses like pay­roll. The stu­dents, who had bor­rowed ex­tra money to cover things like rent and gro­ceries, were forced to use food banks or skip classes for lack of bus fare.

Lau­ren Jack­son, a sin­gle mother seek­ing a doc­tor­ate at the Illi­nois School of Pro­fes­sional Psy­chol­ogy, an Ar­gosy school in Chicago, did not re­ceive the roughly $10,000 she was due in Jan­uary. She has been pay­ing ex­penses for her and her 6-year-old daugh­ter with bor­rowed money and Go­FundMe do­na­tions. On Tues­day, af­ter three months of not pay­ing her rent, she re­ceived an evic­tion no­tice.

“I didn’t want to go home and tell my baby that Mommy may not be a doc­tor,” said Jack­son, whose school could close to­day. “Now I don’t want to go home and tell her that we don’t have a home.”

Led by Sec­re­tary Betsy DeVos, the Ed­u­ca­tion Depart­ment has re­versed an Obama-era crack­down on trou­bled vo­ca­tional and ca­reer schools, al­low­ing new and in­ex­pe­ri­enced en­trants into the field.

“The in­dus­try was on its heels, but they’ve been given new life by the depart­ment un­der DeVos,” said Eileen Con­nor, di­rec­tor of lit­i­ga­tion at Har­vard Law School’s Project on Preda­tory Stu­dent Lend­ing.

DeVos, who in­vested in com­pa­nies with ties to for-profit col­leges be­fore tak­ing of­fice, has made it an agency pri­or­ity to un­fet­ter for-profit schools by elim­i­nat­ing re­stric­tions on them. She also al­lowed a grow­ing num­ber of for-profit schools to evade even those loos­ened rules by con­vert­ing to non­prof­its.

That’s what Dream Cen­ter wanted to do when it asked to buy the re­mains of Ed­u­ca­tion Man­age­ment Corp. But Dream Cen­ter had never run col­leges. Alarms were ring­ing from the mo­ment the takeover was pro­posed. Dream Cen­ter’s ef­fort to buy the fail­ing ITT Tech­ni­cal In­sti­tutes schools had fallen apart af­ter re­sis­tance from the Obama ad­min­is­tra­tion. When it asked to buy Ed­u­ca­tion Man­age­ment’s schools, con­sumer groups, mem­bers of Congress and some re­gional ac­cred­i­tors raised con­cerns. But in late 2017, DeVos’ agency gave pre­lim­i­nary ap­proval to Dream Cen­ter’s plan.

New York Times

Lau­ren Jack­son, a stu­dent at Ar­gosy Univer­sity, and her 6-year-old daugh­ter, Brook­lynn Franklin, are be­ing evicted from their Chicago apart­ment. Jack­son, who did not re­ceive the roughly $10,000 she was due in Jan­uary, is one of thou­sands caught in the melt­down at Dream Cen­ter.

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