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Investigators Probe Shuttered For-Profit Colleges

Two weeks after the gates dropped at Butler Business School in Bridgeport, Conn., regulators and investigators are still asking what caused the closure

Photograph by Glen Scott

Two weeks after the gates dropped at Butler Business School in Bridgeport, Conn., regulators and investigators are still asking what caused the closure

Any hope students had for the reopening of five for-profit colleges located in Connecticut and Rhode Island is rapidly fading. Regulators have yanked the accreditation of the company that owns the schools, ongoing investigations in both states are probing its finances, and a U.S. senator is demanding repayment for about 1,500 students.

Two weeks after the Dec. 30 closure, regulators and investigators still don’t know what caused the Butler Business School in Bridgeport, Conn., and four Sawyer schools in Connecticut and Rhode Island to close. The schools had experienced a big drop in enrollment and federal student aid, according to a U.S. Department of Education spokesman quoted by the Associated Press. Attempts to get comment from a lawyer for the owner of the schools, Academic Enterprises, were unsuccessful.

The Accrediting Council for Independent Colleges & Schools (ACICS) has revoked the accreditation of all five schools, says Anthony Bieda, an ACICS spokesperson. This means that even if the schools were to reopen tomorrow, they would have to go through the two-year process of regaining accreditation and, during that time, students would not be eligible for financial aid.

Academic Enterprises has about two weeks to devise a teach-out plan—guidelines on how to help students complete their studies or get reimbursed for their tuition—before ACICS will decide whether to disbar it. If disbarred, the organization will never be eligible for accreditation from ACICS, a red flag to most other accrediting bodies that would probably put the company out of the education business, says Bieda. ACICS renewed accreditation for Butler and the four Sawyer schools in 2011. Butler, which dates back to 1900, had a six-year grant for its accreditation, which is given only to schools that are most reputable, says Bieda.

“This is little consolation for the students,” he adds. “I’ve been reading the coverage and anecdotes of the students. It’s disgusting.”

Losing accreditation might not be the worst of the owner’s problems. State authorities in Rhode Island and Connecticut are investigating to see if any laws have been violated. Already the schools seemed to have ignored the procedures in place to close for-profit schools. For example, Connecticut requires such institutions to notify the Office of Higher Education (OHE) at least 60 days in advance of closing in order to help students make appropriate arrangements. Academic Enterprises gave no warning, said Constance Fraser, spokesperson for the OHE.

Authorities in Connecticut would not comment on any ongoing investigation, but Attorney General George Jepsen issued a statement on Jan. 4, saying his office is working with the OHE to secure student records so that the OHE can make student payments from the state’s guaranty fund. “My office will aggressively seek reimbursement from the schools,” the statement said. “We will also seek to enforce any penalties that OHE may impose pursuant to its statutory authority to impose administrative civil penalties.”

The offices of higher education in both states are reviewing individual student records to help students either transfer to comparable programs to complete their studies or get their tuition back. Should students decide they no longer want to pursue their studies, federal student loans are forgiven in the event of a sudden school closure, says Fraser. Students should register with their state’s office—at in Rhode Island or in Connecticut—to ensure they get help.

Senator Richard Blumenthal (D-Conn.) says that although many for-profit schools are reputable, many others aren’t, citing a recent Senate analysis showing that some for-profits leave students without degrees and burdened by debt. Academic Enterprises, he said, might be among the failures. His office has written to the owners of the school demanding full reimbursement for students.

“Unfortunately, through either mismanagement or something worse, these schools have failed to fulfill their duties,” says Blumenthal. “They should be held accountable.”

Join the discussion on the Bloomberg Businessweek Business School Forum, visit us on Facebook, and follow @BWbschools on Twitter.

Di Meglio is a reporter for in Fort Lee, N.J.

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