A leak out of the North Carolina higher education system confirms what insiders have been telling me, and online rumors have indicated: Dream Center Education Holdings (DCEH) plans to shut down many of the Art Institutes and other campuses it acquired last year from faltering for-profit college chain EDMC.

An email obtained by the Raleigh News & Observer, sent last week by Kaity McNeill, director of Licensure for the University of North Carolina, states, “We will receive official notification tomorrow afternoon that Dream Center Education Holdings has decided to close 3 campuses in the state: South University-High Point, the Art Institute of Raleigh-Durham, and the Art Institute of Charlotte. Enrollment will cease for the upcoming term and the plan is to close all of the campuses by the end of this calendar year.”

Republic Report last month published two investigative articles raising concerns that the former EDMC schools have been run in a troubling manner since Brent Richardson and the Dream Center took over, with clear conflicts of interest (DCEH schools seemingly being leveraged to provide revenue to for-profit companies linked to Richardson), serious legal compliance questions, and concerns about the company accelerating predatory recruiting practices.

Last week, Senator Dick Durbin (D-IL) wrote to the president of the accreditor Higher Learning Commission about concerns that (as Republic Report first reported) DCEH misled students about the accreditation status of several of its campuses, including the Illinois Institute of Art.

EDMC itself and 58 corporations corresponding to various EDMC/DCEH campuses filed for Chapter 7 bankruptcy in Delaware on Friday. Overseers will need to explore the precise connection between the bankruptcy filings and the campus moves by DCEH. UPDATE 07-02-18 11:00 pm: The Pittsburgh Post-Gazette reported today, “Dream Center said in a statement that it is not connected to the bankruptcy.”

We should be concerned that the emerging DCEH strategy is closing physical campuses and laying off good faculty and staff and focusing on online-only programs, which tend to be of lower quality and cheaper to offer — good for a company’s bottom line but bad for students and taxpayers. The troubling trend of predatory for-profit colleges being converted to sham non-profits seems to be going hand in hand with the move to online-only education — see Kaplan/Purdue Global, Grand Canyon, Bridgepoint, and others.

UPDATE 07-02-18 9:10 am:

An email from DCEH this morning announces that the company will cease enrollments at some 30 campuses — just as the North Carolina email indicated as to the DCEH campuses in that state. The message explains, “This decision was made for a number of reasons, including significantly declining enrollment and an increase in the demand for online programs in higher education.” It also presages additional upheaval: “We will cease new enrollments at these locations, providing prospective students with access to online offerings or programs at one of our other campuses…. It is important to note that current, active students should continue to attend class as scheduled. However, we are continuing to assess the viability of our current offerings at these locations.”

The campuses ending enrollments are:

The Art Institutes: Arlington VA, Charleston SC, Charlotte, Chicago, Denver, Fort Lauderdale, Indianapolis, Nashville, Novi MI, Philadelphia, Phoenix, Raleigh-Durham, Portland OR, San Bernardino CA, San Francisco, Santa Ana CA, Sacramento, Schaumburg IL;

Argosy University: Alameda CA, Dallas, Denver, Nashville, Ontario CA, Salt Lake City, San Diego, Sarasota FL, Schaumburg IL;

South University: Cleveland, High Point NC, Novi MI.

DCEH has since posted a statement discussing the moves, and denying any connection to the EDMC bankruptcy, on its website.

There is chaos and heartbreak for students, faculty, and staff.

In addition to the report of North Carolina campus closings, the Denver Post reports that DCEH filed notice on Friday with the Colorado Department of Labor that the Art Institute of Colorado (Denver) will close its doors at the end of 2018.

The Philadelphia Inquirer reports that last week the Art Institute in that city notified city and state officials that the school would close on August 28 and that all 171 employees would lose their jobs by the end of the year.

The ARLNow website reports that DCEH spokesperson Anne Dean acknowledged that the Arlington VA-based Art Institute of Washington will close soon.

So while DCEH’s email to staff and website statement do not acknowledge that campuses will be closing, DCEH filings with at least some states, and other statements, indicate otherwise. That the DCEH management believes it can get away with such obvious deception is another sign of their breathtaking arrogance and incompetence.

Staff at various DCEH campuses are reporting to me that management have provided them with confused, conflicting, and confounding messages regarding the future course of their schools and the continuance of their jobs.  I plan to report more details as events develop.

Given the tawdriness and disarray that has characterized DCEH/Brent Richardson’s management of the former EDMC schools, with clear evidence of conflicts of interest, compliance failures and predatory practices, it is a disgrace that the Betsy DeVos Department of Education, last September, preliminarily concluded, in a letter to DCEH, that it did not see any impediment to approving the chain’s conversion to non-profit status for the purpose of federal rules, and that the Department has continued to provide federal student aid to the company, without demanding serious reforms. The DeVos Department had, in fact, acceded to several demands to renegotiate and reduce the required letter of credit held in case of the institution’s breakdown. In May, however, DeVos’s acting under secretary of education James Manning wrote to Richardson and refused to further reduce the letter of credit, and demanded that DCEH submit a new letter of credit. (The documents linked to above were released by the Department of Education through a FOIA request from the Century Foundation and were provided by Century to Republic Report.)

UPDATE 07-06-18 5:00 pm:

Art Institutes president Claude Brown held a conference call on Friday with leaders of Ai campuses that are set to stop enrolling students. In advance of the call, Brown distributed an email and an “FAQ for Ai Campus Presidents” document for use by campus leaders to answer questions; both were obtained by Republic Report.

Brown wrote in the email that on the call, “I will not take any questions, as I believe there will be too many folks on the line/ calls to do so with any effectiveness.” Brown also wrote of the DCEH decisions, “I know there have been stumbles thus far, for which I apologize.” Brown’s email adds, “I wanted to share with you that there will be no new information at this time.”

The FAQ explains that Ai campuses are halting enrollments “for a variety of reasons, including significantly declining enrollment, which renders campus-based programs in these markets unsustainable at a time when there is also an increase in the demand for online programs in higher education.”

The FAQ lays out available options for students currently enrolled on the campuses that are ending new enrollments. Students who were scheduled to begin studies this coming Monday can get a 50 percent tuition discount by enrolling in comparable Ai online programs or going to another Ai campus. Continuing students, the FAQ says, will be able to complete their studies uninterrupted if they graduate by December 31 and will get a 50 percent tuition reduction for the remainder of their program. Current students also would be eligible to move to studying online or enroll at another Ai, South University, or Argosy campus that offered a comparable program — and also get a 50 percent discount. Or they could get a $5000 “tuition grant” to study at “partner institutions” cooperating with DCEH. 

The FAQ also describes how staff layoffs will proceed “between now and the end of the calendar year.” It states: “Some employees will exit in the near-term, others will be asked to stay for a longer period, including through the transition, to ensure that we meet the needs of our continuing students.”

The FAQ then finally acknowledges the obvious: that DCEH has “made the decision to transition our offerings to an online-only offering at 30 locations and to discontinue campus-based programs at the end of the calendar year” at those locations. But in the same paragraph, the FAQ insists, “All locations under DCEH ‘remain open.'” Meaning, perhaps, that you will still be able to show up at a building or a website named after the local ghost campus and enroll to study online. Meanwhile, as noted above, DCEH has informed multiple states that the campuses are closing.

The FAQ also explains that Ai schools that had been accredited by the Higher Learning Commission are not currently accredited, a fact that Ai had been misrepresenting on its website until this false statement was pointed out — first by Republic Report and later by the Pittsburgh Post Gazette and then Senator Dick Durbin.

UPDATE 07-11-18 9:20 am:

There is no mention in the DCEH talking points, and at least some campuses (therefore not surprisingly) appear not to be telling students, about their potential right to obtain a closed school student loan discharge. As noted above, DCEH is pretending the campuses are not closing, even though it has reportedly told regulators in multiple states that campuses are closing, and even though the company has indicated that it will stop teaching students in person at those locations.

UPDATE 07-12-18 11:30 pm:

New Art Institutes forms distributed to students show that Ai is now at least informing students of the possibility of a closed school discharge by directing them to the Department of Education information page on that subject.

However, the forms present a new anti-student twist: One of the options presented, a $5000 “tuition grant” to study at another school where Ai does not offer a comparable program online, requires the student to (1) waive all legal claims against the school and (2) agree to keep the existence and terms of the agreement a secret. This is a coercive provision, again underscoring that the supposedly nonprofit DCEH is always ready to play hardball with its students.

The DeVos Department of Education should be stepping up, demanding that DCEH/Ai provide better options and information for students, and providing its own guidance. Instead, so far at least, the Department, which facilitated DCEH’s disgraceful takeover of the former EDMC schools, has done nothing of the sort.