For-Profit Closes After Losing U.S. Aid

Officials at Marinello Schools of Beauty announced Thursday that they are shutting down campus operations. This decision follows the U.S. Department of Education's announcement Monday that the institution lost the ability to participate in the federal student aid program.

“Despite Marinello Schools of Beauty's long history of compliance with regulatory requirements, the Department of Education has delayed funding to our students for over two months without specifying allegations of wrongdoing or even allowing us to respond. Repeated attempts to get the most basic information from the Department of Education about their potential concerns were rebuffed. We repeatedly informed the department that its actions could lead to the closure of the schools and it refused to provide any information about its concerns. This complete lack of due process has caused Marinello irreparable harm,” said Joe Hixson, a spokesman for the institution, in an email.

The department's investigation into Marinello alleged that the for-profit knowingly requested federal aid for students based on fabricated high school diplomas, while also “underawarding financial aid to students and charging students for excessive overtime.” The department gave Marinello until Feb. 16 to dispute the findings of their investigation, but also notified Marinello that its participation in federal aid programs would end Feb. 29.

“Without providing Marinello any time to refute or defend these untrue accusations, the department chose to cut off funding to our students at 23 schools, none of which has ever been found to have any curriculum or instructional deficiencies by our nationally recognized accreditors or the states in which they operate. We intend to appeal this decision and believe we have done nothing wrong and will defend ourselves vigorously. We object strongly to the lack of due process the department has afforded, which in turn has put our operations at risk. If the department is convinced of its position then it should have provided us with due process to contest its findings,” Hixson said.

In a news release from the for-profit, Marinello officials said they would work on transfer options for the approximately 4,300 students affected by the closure. Marinello campuses in California, Nevada and Utah will close today, while campuses in Kansas and Connecticut will close Friday.

A letter to students about their options was also posted to the institution's website.

(Update: A statement on our editorial independence may be found here. Quad Partners, which is an owner of Inside Higher Ed, owns 3.6 percent of a holding company that owns Marinello.)

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Education Department denies federal aid to two for-profit chains

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Two proprietary institutions lose federal financial aid after a series of investigations by the U.S. Department of Education.

For-Profit Westwood College Announces Closing

Denver-based Westwood College announced Wednesday it will shut down in March, according to a CBS affiliate.

In November, Westwood, which has 14 campus locations nationally, announced it would stop enrolling new students. The decision came after the college made an agreement with the Illinois attorney general's office to wipe out $15 million in student loans.

In 2012, Westwood settled with the attorney general of Colorado for $4.5 million for deceptive marketing. In 2009, the college agreed to a $7 million settlement with the U.S. Department of Justice related to a complaint about filing false claims for federal student aid.

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Federal judge upholds some Massachusetts regulations on for-profit colleges, strikes down others

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Massachusetts for-profit college friends and foes have something to cheer in the federal court decision.

Pentagon Lifts Probation of U of Phoenix

The U.S. Department of Defense on Friday removed the University of Phoenix from probationary status, allowing the for-profit chain to again be eligible to participate in a tuition assistance program for active-duty members of the U.S. military.

The sanction, which the Pentagon handed down last October, was related to allegations of improper recruiting of service members. The Pentagon also cited investigations of the university by the U.S. Federal Trade Commission and California's attorney general. As a result, Phoenix, which said at the time that it had fixed military-recruiting compliance issues, was barred from recruiting on military bases or enrolling students who received military tuition assistance.

"The department determined that the removal of probationary status was warranted based on the department's internal review, the university's response to the department's concerns as set forth in multiple potential noncompliance notifications including the department's letter dated Oct. 7, 2015, the active engagement and cooperation by representatives of the University of Phoenix, and other relevant materials," said a Defense Department official in a written statement.

Several Senate Republicans, including Arizona Senator John McCain, had complained about the sanction. McCain called the news last week a "victory for due process and basic fairness."

BREAKING: Apollo Considers Change in Ownership

Apollo Education Group’s board announced today that the company is exploring a potential change in control of the company. Apollo is the parent company of the University of Phoenix.

“The board believes that these actions will support and accelerate Apollo’s strategic initiatives, which include the continued growth and investment in Apollo Global and the continuation of the University of Phoenix’s transformation plan to further enhance student outcomes and provide outstanding, career-relevant higher education for working adults,” a news release from the company said.

The company has been shrinking. Corporate filings released today revealed Apollo’s first-quarter revenue is down to $586 million compared to $714.5 million a year ago. Enrollment also continues to decline. Total enrollment is at about 201,000 students compared to about 267,000 last year.

Apollo also reported that in August the Federal Trade Commission had launched an inquiry into Phoenix's "practices and procedures for safeguarding student and staff personal information." That inquiry is separate from the FTC's civil investigative demand in July that relates to an investigation into allegations of deceptive or unfair advertising, marketing, or product or service sales. According to the filing, the August inquiry was closed without any "adverse action."

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For-Profit Group's Entreaty to John King

The Association of Private Sector Colleges and Universities on Monday wrote to John King, the acting U.S. secretary of education, to request a "constructive collaboration" between the for-profit sector and the department during the Obama administration's final year. Steve Gunderson, the group's president and CEO, asked King to work with for-profits in the run-up to the reauthorization of the Higher Education Act, which is the law that governs federal financial aid.

"A new year, and new leadership at the department, brings opportunities for new beginnings. My hope is that together we can begin an era of constructive collaboration that never forgets our common mission in serving the students enrolled in our sector's schools. Unfortunately, the past six years have been marked by an era of ideological confrontation where nobody wins -- especially the students," Gunderson wrote.

In the letter Gunderson pointed to steep enrollment declines many for-profits have experienced in recent years, noting that the sector enrolled 562,000 fewer students in 2014 than it did four years earlier. However, he also said for-profits issued more credentials in 2014 than they did during the height of the recession. And Gunderson criticized the department for its aggressive scrutiny of for-profits.

"As much as I am a fan of all sectors of higher education, I believe that no sector could survive the level of investigations and attacks that have been directed to our schools in recent years," he wrote.

Career Ed Closing Down Le Cordon Bleu Operations

Career Education Corporation announced yesterday that it will stop enrolling new students at the Le Cordon Bleu Colleges of Culinary Art after Jan. 4, 2016, and wind down operations. 

The for-profit company attempted to sell the 16 culinary campuses this year, but negotiations with a potential buyer failed. Le Cordon Bleu was the for-profit company's most well-known brand. The campuses are expected to remain open until September 2017. 

"New federal regulations make it difficult to project the future for career schools that have higher operating costs, such as culinary schools that require expensive commercial kitchens and ongoing food costs," said Todd Nelson, president and chief executive officer of Career Ed, in a news release. "Despite our best efforts to find a new caretaker for these well-renowned culinary colleges, we could not reach an agreement that we believe was in the best interests of both our students and our stockholders." 

The for-profit plans to "refocus" resources on Career Ed's online university and provide Le Cordon Bleu students the appropriate resources in the "teach out." 

Massachusetts Commissioner of Higher Education Carlos Santiago expressed his displeasure with the college's closing. Le Cordon Bleu enrolled 256 Massachusetts students, of which 29 are military veterans. 

"I am disappointed to learn that the parent company of Le Cordon Bleu chose to announce its closure plans to the media before notifying the Department of Higher Education," Santiago said in a news release. "Massachusetts law requires notification of an institution's shutdown plans as far in advance as possible, and such plans must be approved by the department before implementation. It is the commonwealth, through my office, that will determine whether the September 2017 closure plans move forward, or whether an alternate closure plan is deemed to be in the best interest of students." 

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Apollo Group Buys Its First College in Germany

The Apollo Group, the parent company of the University of Phoenix, has made its first purchase in Germany, Phoenix Business Journal reported. At a time when Phoenix is shrinking, Apollo is growing outside the United States. Apollo paid $105 million for Career Partner GmbH, which offers 24 bachelor's programs as well as some master's programs, including an M.B.A.

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Briarcliffe College Plans to Close in 2018

New York-based Briarcliffe College will close its two campuses by the end of 2018, Newsday reports.

Briarcliffe is owned by Career Education Corporation, a for-profit college chain based in Illinois. Career Ed put the institution up for sale about seven months ago but did not find an appropriate buyer. The college isn't accepting any new students and will "teach out" the students already enrolled. Operations will end on the Bethpage, N.Y., campus in April 2018. The college's online program and the Patchogue, N.Y., campus will cease operations in December 2018.

In a notice to the state labor department, Briarcliffe acknowledged that the college was closing for financial reasons. Briarcliffe's enrollment had fallen by 50 percent in the last 10 years. According to the National Center for Education Statistics, the college enrolled about 1,700 students last year.

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