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For-profit school operator closing 30 campuses, including 3 in NC

The Art Institute of Raleigh-Durham takes up several floors in the main building at the American Tobacco Campus in downtown Durham.
The Art Institute of Raleigh-Durham takes up several floors in the main building at the American Tobacco Campus in downtown Durham. The News & Observer

Dream Center Education Holdings will no longer accept students at its Art Institute campuses in Durham and Charlotte, a spokeswoman for the company confirmed on Monday.

The News & Observer first reported on Friday that the campuses would close based on a memo from the UNC system staff that handles licensure issues for universities that operate in North Carolina.

An internal memo obtained by The N&O that was sent to Dream Center employees Monday morning revealed that the company would stop accepting new students at 30 of its campuses nationwide.

"Over the last several months, we have taken a strategic and comprehensive look at each of our three education systems and their respective campuses, evaluating them to be sure that they are meeting the needs of today's learners and providing the best student and graduate outcomes," the Dream Center memo said.

"What has become clear is that we have a critical need and responsibility to become a much more agile organization, responsive to the needs of our students and the changing demands of higher education."

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A screenshot of an internal communication sent to Dream Center Education Holdings employees on Monday, announcing the closure of 30 campuses. Submitted

In addition to the Art Institute, the company runs South University and Argosy University.

In North Carolina, Art Institute campuses in Durham and Charlotte and a South University campus in High Point will stop admitting students, affecting around 3,000 students. In South Carolina, the Art Institute of Charleston is also among the campuses closing.

In total, 18 Art Institute campuses, nine Argosy University campuses and three South University campuses were affected by the decision.

Thirteen Art Institute campuses will remain open. The schools offer classes in animation, design, film and audio production and fashion, as well as a culinary school.

In a statement to The N&O, Dream Center spokeswoman Anne Dean confirmed the information in the internal memo.

"We have been undergoing an ongoing process of evaluating the viability of certain campus-based programs relative to student needs and preferences in order to best support our students, both present and future. As a result of that examination, we have made the decision to cease new enrollments for a number of schools within The Art Institutes, Argosy University, and South University systems," Dean said.

The company blamed declining enrollment and an increase in the demand for online programming in its internal memo to staff.

Prospective students will have access to online offerings or programs at one of their other campuses, Dean said. "Active students should continue to attend class as scheduled," she added.

Dean said the company is working with accreditors and regulators "to assess the viability of our current offerings."

The Durham campus takes up several floors in the American Tobacco Campus in downtown Durham. Currently class is not in session there, but students are scheduled to return on July 9. Dean did not reply to questions about whether those students should plan to attend class in Durham or online.

According to enrollment figures from the UNC system, which are about a year old, the Art Institute of Charlotte had 819 students enrolled, the Art Institute of Raleigh-Durham had 602 students and South University in High Point had 1,607 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 told The News & Observer on Friday.

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 decision comes months after Dream Center acquired the educational systems 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 told The N&O 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.

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