Argosy on Brink of Closure

The for-profit college chain will shut down today, affecting several thousand students, if a new buyer is not secured -- a scenario observers say has small chances of happening.

March 8, 2019
 
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Argosy University's Chicago campus

A court-appointed receiver plans to close Argosy University campuses today if a buyer is not found for the for-profit college, a decision driven by the Trump administration’s decision to cut off Title IV student aid to those colleges more than a week ago.

But the receiver has yet to convey those plans officially to the Department of Education and is due to appear Monday before a federal judge in an ongoing legal challenge over his management of the colleges. The murkiness over the campuses’ status entering Friday adds to uncertainty students have faced since Argosy failed to make financial aid payments for the spring semester.

Campus closures would mean students could either opt for loan cancellation or seek to transfer their credits to a different college -- a choice that could be more difficult without an official agreement in place between Argosy and another institution.

Lawyers for Mark Dottore, the receiver, said in court filings this week that he had worked “around the clock” since the department cut off federal aid to find potential buyers to take on those campuses. Dottore has had discussions with 15 potential buyers for various campuses held by Dream Center Education Holdings, the Argosy parent company, according to the court filings. But some observers said the prospects of a deal happening before the colleges run out of money appeared dim.

“On this kind of time frame, I think that’s highly unlikely,” said Trace Urdan, a managing director at Tyton Partners, a consulting firm with a focus on the education sector. “I would be shocked if somebody comes along at the 11th hour for this particular asset.”

More than 8,800 students would be affected by campus closures, according to Education Department estimates. Argosy said in court filings this week that more than 10,000 would have their studies interrupted.

If a buyer isn’t found, the college could find a “transfer partner” where students could complete their studies. In another court filing Thursday, Dottore identified one potential partner as South University. The college was formerly owned by Dream Center and retains its access to Title IV access. In an emergency motion, Dottore outlined an articulation agreement that would allow Argosy students to transfer credits to corresponding programs at the Savannah, Ga.-based college, which has campus locations across the South.

Dottore sent an email to students about the deal telling them they would receive a tuition discount and promising that the South University online experience "will be very similar to your Argosy University experience." 

Antoinette Flores, the associate director for postsecondary education at the Center for American Progress, called the proposal a “Band-Aid.”

“It’s not necessarily any more stable. They themselves are on shaky financial footing,” she said of South University. “It’s just prolonging the pain for students.”

The Dream Center-operated Western State College of Law, meanwhile, told students this week that it is in discussions with a potential buyer. Allen Easley, the law school’s dean, said in an email to students that its administration is working on plans to stay open long enough for them to complete the semester -- regardless of whether a sale goes through. Although the law school’s leadership would prefer to find a buyer that would allow it to stay open permanently, Easley said school officials have also had extensive discussions with their accreditor, the American Bar Association, and other nearby law schools about making arrangements for students to complete their programs elsewhere in case Western State closes.

Senator Dick Durbin, an Illinois Democrat and frequent critic of for-profit colleges, said in a statement that it “appeared increasingly likely that Argosy’s closure is imminent.”

“I’ve called on the Department of Education to immediately step up to work with accreditors and states to establish options for students to continue their studies at high-quality institutions. I’ve also called on the department to immediately notify Argosy students of their option for federal closed-school discharge should Argosy close and to extend the window for students to be eligible,” he said. “As this shameful spectacle plays out in court and in the news, the department’s silence when it comes to providing meaningful information to students is inexcusable.”

The Education Department already provided information to Argosy students about their options through the Office of Federal Student Aid after it cut off Title IV funds. On Thursday night, it posted an update on those options in light of potential campus closures.

"Although the court has not yet granted the receiver’s motion to close the campuses, ED recognizes that an imminent closure is a distinct possibility and is providing additional information for students," the department said in an announcement posted to the FSA website Thursday.

If closures do occur, the department will post updated information about students' eligibility for loan cancellation through a process called closed-school discharge as well as transfer options.

"Even if the schools do not officially close, ED has begun the process to identify Argosy and Art Institute students that were disbursed a federal direct student loan for the current term and is in the process of cancelling those disbursements," the statement said.

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