When the Education Department started to deregulate the for-profit college industry in 2017, Dream Center Education Holdings — a Christian nonprofit with no experience in higher education — began acquiring schools. Two years later, the charity affiliated with a Pentecostal megachurch in Los Angeles has shuttered dozens of colleges and art institutes around the country with little warning.
The franchises owned by Dream Center include Argosy University, South University, and the Art Institutes. The affected schools have about 26,000 students. 40 campuses are under the control of a court-appointed receiver who accused school officials of keeping their doors open with money earmarked for federal student loans — about $13 million owed to students at 22 campuses. Fourteen other sites, mostly Art Institute locations, have a new owner who arranged the transfer through private equity executives.
Buying a chain of schools “aligns perfectly with our mission, which views education as a primary means of life transformation,” Randall Barton, the foundation’s managing director, said when Dream Center announced its plans to buy assets off the floundering Education Management Corporation (EDMC). (In 2015, the corporation, which owned the Art Institutes, paid $200 million in a settlement after an investigation into its recruiting tactics of enrolling students who had little chance of succeeding.) The decision was opposed by consumer groups, members of Congress, and some regional accreditors
By the end of last year, Dream Center faced eviction on at least nine campuses and owed creditors more than $40 million. The network of schools began to unravel last summer when the nonprofit announced the sudden closure of 18 Art Institutes, nine Argosy University sites, and three South University campuses.
Earlier this month, the Art Institute of Pittsburgh abruptly shuttered — much to the surprise of the school’s 2,100 students. The historic college was founded in 1921 and purchased in the late-1960s by EDMC. It recently offered classes in animation, graphic design, interior design, culinary arts, and fashion. On March 11, students were wheeling away their books and art projects as men in hard hats began removing larger objects from the school’s campus.
“Pretty much the best times of my life were spent in that building,” Avery Hsu told the Pittsburgh Post-Gazette. “It was a fun time to be there, learn and do it yourself.” The 23-year-old culinary student was roughly two years into a four-year bachelor’s program when news of his school’s closure came.
Hsu isn’t the only one who’s been shocked by the rapid pace of Dream Center’s demise. The New York Times reports that at least one psychology doctorate student was still owed $10,000 in backpay from an Argosy school in Chicago. Unable to pay her rent for the last three months, she and her 6-year-old daughter received an eviction notice.
“I didn’t want to go home and tell my baby that Mommy may not be a doctor,” Ms. Jackson told the publication. “Now I don’t want to go home and tell her that we don’t have a home.”
In an email two weeks ago, Art Institutes system president Claude Brown told staff that some of their campuses would be transferred to Education Principle Foundation (EPF), a nonprofit created five years ago by Colbeck Capital, which also funds Studio Enterprise, a Los Angeles company that’s also providing non-academic services to the colleges.