September 26, 2022

For-Profit Stratford University Suddenly Shuts Down

For-Profit Stratford University Suddenly Shuts Down
Stratford University students on the Alexandria campus Monday. Screenshot from InsideNova @JaredGM19 video.

For-profit college chain Stratford University, which has offered degree programs in nursing, business, and other career fields, announced Friday that it would close its remaining campuses, located in Woodbridge and Alexandria, Virginia, and Baltimore, Maryland, effective at the end of the current school term. By today, the school told students it was actually shutting down all classes, on campus and online, and that the campuses would close this week (even though the school catalogue says the term ends October 9). The school will also lay off 150 employees by Friday. (Stratford’s website lists an additional campus in New Delhi, India.)

Stratford’s abrupt announcement came after the U.S. Department of Education informed the school it would stop providing federal student grants and loans to new students who wouldn’t be on track to complete their programs in 18 months. The Department also required the school to post a letter of credit to stay in the federal aid program.

The Department’s action came in the wake of an announcement this month by Stratford’s accreditor, ACICS, that it will shut down by early 2024. The Department reached a final decision in August to end ACICS’s status as a recognized accreditor, after years of revelations of abuses against students by ACICS-accredited schools including Corinthian Colleges, ITT Tech, and Kaplan College, and after a long series of proceedings and court skirmishes. ACICS decided to close rather than appeal the Department’s decision.

The Department action means that the remaining 40 or so schools accredited by asleep-at-the-switch ACICS, including Stratford, the largest of them, will no longer be eligible for federal aid unless they find new Department-approved accreditors in the next 18 months.

The Department initially moved to kick out ACICS in 2016, before the accreditor sued and the Trump/DeVos education department reversed the decision. The Biden administration renewed efforts to terminate ACICS in early 2021. Stratford thus has had ample warning and years to improve its instruction and management and seek approval from a new accreditor — there were other accreditors, such as ACCSC, that have long tolerated school shortcomings — instead of just hoping lax ACICS would be saved. (Stratford’s owner now claims the school was 8 to 10 months away from getting approval from another Department-recognized body, the Distance Education Accrediting Commission.)

Echoing past for-profit college shutdown explanations, Stratford said it would quickly run out of cash if it was not permitted to enroll new students.

In reality, many for-profit colleges are more call center than educational institution. They spend their money on advertising and recruiting, not teaching. They exist to enroll; they’re all about new students, not current students. If they lose a month of two of new enrollment cash, they say they can’t go on. The students, such as the some 1000 to 1500 now enrolled at Stratford University, then get locked out of their campuses.

The Department of Education has traditionally aimed to avoid college closures at all costs, now matter how bad the school and outcomes for students, and has bent to school demands as a result. But in the final years of the Obama administration, the Department finally started to recognize that closing bad schools, and dealing with the hardships of current students, is better than allowing more generations of students to enroll in them and face crushing debt. The Biden administration’s firm stance with Stratford is a hopeful sign that this kind of decisiveness is coming back. (The Department was mostly firm, but still somewhat indulgent — it apparently was still going to allow the school to enroll new students if they could complete their studies within 18 months.)

In the face of a contentious meeting on the Alexandria campus Monday, where more than 100 nursing students, many with tens of thousands of dollars in student loan debt already, rightly demanded answers about their futures, and school employees called police to campus, Stratford president and owner Richard Shurtz blamed the Biden Department of Education, rather than the performance of his school or its accreditor.

Shurtz told the news outlet InsideNova that the Department’s decision to de-recognize ACICS was “purely political” and the decision to end federal aid for new enrollees was “an overreach.” He added, “They’re trying to drive for-profit schools out of business.” Shurtz called Stratford a “family business.” Faced with students worried about what would happen next, Shurtz presented himself as a visionary entrepreneur:

“I’m working with a group in California, Silicon Valley. Because I think education in general has to re-tool,” he told InsideNoVa, going on to explain Ray Kurzweil’s book “The Singularity is Near” and the Latin root of the word education. “What I’m going to try to do is to reinvent education.”

None of that blather will mean much to the single moms, veterans, and other striving Americans lured by Stratford’s aggressive online advertising and recruiting.  Shurtz owes these students, and U.S. taxpayers, a better explanation than what he offered.

Stratford’s performance wasn’t great.

The school had been in trouble with ACICS, despite the accreditor’s own history of lax oversight.

In September 2019, ACICS informed Stratford it was investigating reports that the school was misleading students about the accreditation status of a Stratford campus located in Erbil, in Iraqi Kurdistan. In February 2020, ACICS’s president, Michelle Edwards, wrote to Shurtz alleging that Stratford had opened an Erbil campus “that was not approved by ACICS.” Edwards cited a whistleblower account, internal school emails, and also a YouTube video in which Shurtz explains “in English that the Erbil campus is fully accredited and offering programs that are being offered in the U.S.”

Based on the information, ACICS directed Stratford to cease enrollment at all campuses and submit teach-out plans to find new schools for existing students. Stratford sued, and obtained from a Virginia federal judge an injunction, declaring that ACICS should have given Stratford time to respond before suspending enrollments.  The case was dismissed later that year. Stratford claimed it intended to open only a separate language school in Erbil and blamed its Iraq partners for unauthorized actions.

But Stratford failed other performance measures. Two Stratford programs — medical assisting and culinary — flunked even the low standards of the Department of Education’s 2017 gainful employment rule, which measured whether graduates could earn enough to handle their loan debt.

In 2019, Stratford abruptly announced the closing of three other Virginia campuses, creating upheaval for students.

Stratford, apparently better at lobbying government than educating students, was lavishly praised by Virginia state legislators in a 2017 resolution celebrating its 40th anniversary, and, by virtue of its long tenure in the state has been exempt from the requirements of certification or approval by the state higher education oversight agency.  Shurtz, conveniently, sat on the agency’s “Career College Advisory Board.”

Shurtz told the nursing students on Monday that he was seeking a deal to allow them to transfer to another for-profit school, Chamberlain University, owned by Adtalem, the company formerly known as DeVry Education.  Chamberlain has faced its own regulatory problems, based on low passage rates on the nursing license exam.

UPDATE 09-30-22: On Tuesday, University Business published a report fleshing out the terms that the U.S. Department of Education proposed to Stratford in order for them to remain in the federal student aid program.  According to the report, the Department had sent to each of the remaining ACICS schools, including Stratford, provisional program participation agreements under which schools would be prohibited from offering new programs using federal aid, as well as enrolling new students, until they received new accreditation. In addition, the agreements require schools to inform students that they might lose financial aid eligibility at the school, provide teach-out plans to provide alternatives for students in the event of school closure, and provide the Department with a letter of credit to protect against taxpayer losses. According to this report, the Department gave schools ten days to agree to these conditions.

UPDATE 02-28-23: InsideNOVA reports: “Stratford University files for bankruptcy; president, vice president listed as biggest creditors….

Shurtz also lists himself and his wife, Mary Ann Shurtz, as the biggest creditors, claiming that the university owes the couple – who served as president and vice president of Stratford – $2.5 million for eight promissory notes. If the court finds their claim legitimate, it could mean that Stratford’s president and vice president get the biggest sum in their own college’s liquidation….

The college paid out over $30,000 in stipends to seven trustees in 2022, but the biggest financial recipients from the business were the Shurtzes. Though the filing doesn’t differentiate which expenses were Richard’s and which were Mary Ann’s, the filings for 2022 alone show over $18,000 in lease and insurance payments for the Shurtzes’ cars, over $4.7 million in loan payments and “collateral return” to EagleBank on behalf of the Shurtzes, and over $330,000 in business credit card payments. Richard and Mary Ann were paid $145,384.62 and $96,923.08, respectively, in salary for 2022.

At the same time, the college’s revenues were declining rapidly, falling from over $33 million in 2020 to $20 million in 2021 and $12.6 million last year, which was impacted by the closure with three months left in the year.”