Three for-profit college campuses in NC are expected to shut down by end of the year

The Art Institute of Raleigh-Durham is based out of the American Tobacco Campus in downtown Durham.
The Art Institute of Raleigh-Durham is based out of the American Tobacco Campus in downtown Durham. The News & Observer

Three campuses, including the Art Institutes in Durham and Charlotte and South University in High Point, are expected to shut down before the end of the year.

The University of North Carolina system was notified this week that Dream Center Education Holdings has decided to close the three campuses, a move that will affect more than 3,000 students, according to internal email communications among UNC system staff who handle licensure issues for universities that operate in North Carolina.

All three will cease enrolling students for the upcoming term, the letter said.

“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,” Kaity McNeill, director of Licensure for UNC, wrote in an email obtained by The News & Observer. “Enrollment will cease for the upcoming term and the plan is to close all of the campuses by the end of this calendar year.”

The Art Institute campuses in Durham and Charlotte are among more than 30 campuses across the country run by Dream Center. Art Institutes offer classes in animation, design, film and audio production and fashion, as well as a culinary school. The Durham campus takes up several floors in the American Tobacco Campus in downtown Durham and enrolls 602 students, according to UNC system data that is about a year old.

A spokeswoman for Dream Center Educational Holdings said that she could not confirm the closures in response to a question about the UNC communication.

State law gives the UNC board of governors the authority to issue licenses to nonpublic and out-of-state institutions that operate degree programs in North Carolina. The board establishes rules, regulations and policies relating to licensing degree programs in the state.

The Art Institute schools were all acquired earlier this year by Dream Center Education Holdings, a California-based nonprofit, for $60 million, according to the Pittsburgh Post-Gazette. Previously, the Art Institute schools were owned by Pittsburgh-based Education Management Corp., a for-profit school operator. EMC also sold its South University and Argosy University educational systems to Dream Center as part of the deal.

As a result of the sale, the schools were supposed to transfer their status as for-profit institutions to nonprofit. But that transfer has yet to be approved by the U.S. Department of Education, a spokesperson for the department said on Friday, a fact that could potentially hamper its ability to receive federal student loan money. Additionally, several Art Institute campuses have faced accreditation issues this year, according to the Post-Gazette.

Currently, the schools are only eligible to participate in Title IV programs, which distribute federal student aid, on a month-to-month basis, the U.S. Department of Education said in a statement to The N&O Friday afternoon.

“The Art Institute brand of schools, sold from Education Management Corporation to Dream Center Education Holdings (DCEH) earlier this year, remain eligible to participate in Title IV (federal financial-aid) programs. All three brands of schools owned by DCEH remain eligible on a month-to-month Temporary Program Participation Agreement while the change in ownership and nonprofit conversion application remain under review by the U.S. Department of Education. That approval is not yet final,” a spokesperson for the Department of Education wrote.

It's unclear when the closures will take place and what exactly that means for students.

Currently-enrolled students would have certain rights under both state and federal law, Nazneed Ahmed, a spokeswoman for the N.C. Department of Justice said.

Ahmed said those rights would depend on each student’s particular circumstances, but could potentially include: a teach-out plan that would allow students to finish their programs, forgiveness of federal loans or recovery of lost tuition under the school’s state guaranty bond.

"Federal law provides specific direction about how students are to be notified of their rights if and when their school closes," Ahmed said. "Students should contact the U.S. Department of Education to assist in determining whether they qualify for these measures."

The news follows several years of significant enrollment declines in for-profit universities across the United States. A report in December from the National Student Clearinghouse Research Center showed that the sector's enrollment slid 13.7 percent in 2015, 14.5 percent in 2016 and 7.1 percent in 2017.

Last year, the for-profit Charlotte School of Law closed following probation from the American Bar Association, a loss of federal funds from the U.S. Department of Education and the revocation of its license from the UNC system.

In 2015, the Art Institutes former owner Education Management Corp. reached a settlement with 38 states, including North Carolina, to reform its recruiting and enrollment practices and forgive more than $102.8 million in outstanding loan debt held by more than 80,000 former students nationwide.

Updated to inlude enrollment information from the UNC system