Argosy University is a for-profit school facing financial problems. The university has a campus in Dunwoody. ERIC STIRGUS / ESTIRGUS@AJC.COM The Atlanta Journal-Constitution
Photo: The Atlanta Journal-Constitution
Photo: The Atlanta Journal-Constitution

Argosy University’s students worry amid school’s financial problems

Many Atlanta-area students taking courses at a for-profit university are worried about its future because the school’s parent company is in financial trouble and they say officials are sharing scant information about the situation.

Those concerns grew after federal education officials announced Wednesday they are giving the school, Argosy University, two weeks to show why it should continue to participate in federal student aid programs.

Many schools that have been dropped from the aid programs have folded, and students often have trouble transferring their credits to another school, experts say.

“It really puts students in a bad situation,” said Yasmin Farahi, policy counsel for the Center for Responsible Lending, an organization which has raised concerns about how for-profits operate and are regulated.

Argosy University holds classes in an office complex near Ga. 400 in Dunwoody. ERIC STIRGUS / ESTIRGUS@AJC.COM
Photo: The Atlanta Journal-Constitution

For some students, their immediate concern is they’re not getting their financial aid. Most Argosy students are older than traditional college students, hoping to learn skills to advance in their company or to start a new career. Tuition during the 2016-17 school year was slightly above $20,000, and more than 60 percent of students received federal student loans, according to federal government data.

Argosy’s parent company, Arizona-based Dream Center Education Holdings (DCEH), agreed to a receivership plan in January after, court records show, it’s been unable to pay some vendors. Nationally, Argosy students are waiting for an estimated $13 million in financial aid, according to one document. Some students borrow money above tuition and school fees to pay for daily expenses like child care and rent.

“The institutions … are fielding hundreds of calls a day from students facing eviction, impacted by repossession, unable to pay child care and unable to provide for their families as a result of these funds not being released,” Mary K. Whitmer, an Ohio-based attorney representing Mark Dottore, recently assigned to manage DCEH’s assets, wrote in one court document.

Argosy has 16 campuses in 11 states and online courses. It offers associate to doctoral degrees in courses such as clinical psychology, business, law and creative arts and design. Argosy offers discounts and scholarships to active-duty military and some others.

Atlanta students and others say most of the school’s department directors and employees have been laid off and enrollment is rapidly dropping. Argosy, which holds classes in an office building in Dunwoody, has about 1,500 students, said Kirk Shook, executive director of the state’s Nonpublic Postsecondary Education Commission.

Several students contacted the AJC in recent days raising concerns and asking questions about Argosy’s future. The students declined on-the-record interviews. Shook said the commission has also received questions from students and called the school Friday seeking answers.

DCEH declined to answer most questions from the AJC about the situation, including the current number of students, but insisted there are no plans to close the school.

“Argosy University, Atlanta remains open and classes continue with no plans to close. … The university remains committed to providing students with a quality education that makes an impact in their lives and the lives of others,” the company wrote this week in a one-paragraph statement to The Atlanta Journal-Constitution.

Federal education officials in late January put Argosy and The Art Institute, another school owned by its parent company, under increased monitoring. One condition of the monitoring is the schools must disburse loans and grants to students from the schools’ own funds before requesting reimbursement from the federal government.

Paying that money to students may be a problem. Court records show one creditor said DCEH and the schools owed $252,737 over a three-month stretch last year. The records don’t specify why there are such unpaid debts. Other documents show money expected by DCEH never arrived, such as one company paying DCEH $6 million for services to support the schools or other investors providing $10 million to help the company pay for operations at Argosy and other schools.

“The situation must be urgently addressed,” Dottore wrote in one letter to a U.S. Department of Education official.

Department officials have said the 8,800 students enrolled at Argosy campuses could try to transfer their credits to other schools or apply to have their loans canceled if their campuses shut down.

This is the latest of Argosy’s financial troubles. Education Management Corp. (EDMC), Argosy’s former parent company, reached a settlement with the federal government in 2015 to forgive more than $6.8 million in loans for thousands of former students of Argosy and several other of its schools in Georgia. EDMC also agreed to pay a $95 million settlement as part of a separate federal whistleblower lawsuit brought by the U.S. Department of Justice. The federal government and four states accused EDMC of illegally paying recruiters to enroll studentswith staffers’ pay tied to the number of students they enrolled.

Several for-profit colleges and universities in the Atlanta region have folded in recent years.

ITT Technical College, which had four campuses in metro Atlanta, closed abruptly in September 2016. The for-profit operator of the Le Cordon Bleu culinary schools announced in December 2015 plans to close all 16 of its campuses across the country, including the metro Atlanta location in Tucker. National for-profit provider Corinthian Colleges sold off most of its campuses, including four Everest College campuses located in metro Atlanta, in 2014.

For-profit colleges have shakier fortunes because they rely more on tuition to operate and spend a higher percentage of their money advertising, typically to low-income households, Farahi said. About two-thirds of Georgia colleges that have closed in the past three years are for-profits, federal records show.

Argosy’s most recent six-year graduation rate was 13 percent, according to federal data. By comparison, the six-year graduation rate at private, nonprofit Georgia schools is about 48 percent, Farahi said.

One option pursued in recent years by more students at failed for-profit schools has been a federal provision that allows them to seek loan forgiveness if they feel a college or university misled them or engaged in other misconduct. Georgia students, if they qualify, could seek tuition refunds from a state fund that Argosy has paid into, Shook said.

Farahi said federal oversight of for-profit colleges has weakened under U.S. Education Secretary Betsy DeVos, particularly a rule critics say encourages the schools to enroll military veterans. About 40 percent of GI tuition and fees since 9/11 have gone to for-profit schools, Farahi said. She noted some states, like New York, are considering proposals that would require the schools to spend at least 50 percent of their money on classroom instruction.

“There’s so little oversight happening, and that lack of oversight has allowed things like this to happen,” she said. 

ARGOSY UNIVERSITY, ATLANTA

Enrollment: 1,500 students

Tuition: $20,317

Six-year graduation rate: 13 percent

2014 student loan default rate: 15.2 percent

Sources: U.S. Department of Education National Center for Education Statistics 2016-17 data; U.S. Department of Education; Georgia Nonpublic Postsecondary Education Commission

WHY IT MATTERS

Georgia has about 140 for-profit colleges and universities, state officials say. At least 18 for-profit schools have folded in the past three years, about two-thirds of all of the closures in Georgia, records show. Many have closed with little notice, forcing students to scramble to continue their education elsewhere. The Atlanta Journal-Constitution has reported on many of these closings, exposing problems about how these schools are regulated. Some education experts and industry observers say the federal government needs to tighten regulations of the schools.

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