For-Profit Closes After Losing U.S. Aid

February 5, 2016

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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