An Embattled For-Profit Law School Is Reportedly Shutting Down

Targeted by the Obama administration, Charlotte Law's students may qualify for debt relief.

Charlotte School of Law

Source: Charlotte School of Law/Facebook

The for-profit Charlotte School of Law is reportedly shutting down, according to  television station WBTV News in Charlotte, North Carolina. The private equity-owned school failed to meet various government deadlines set months after the Obama administration shut off its ability to receive proceeds from federal student loans.

The head of the school’s alumni association, R. Lee Robertson Jr., sent an email Tuesday morning to fellow alums warning them that the school was likely to inform current students of the closure later in the day. The school’s website was down as of Tuesday morning. 

Liz Hill, a spokeswoman for the U.S. Department of Education, said the department had not received word from the school that it was shutting down. Charlotte Law spokeswoman Victoria Taylor didn’t respond to requests for comment. Josh Ellis, a spokesman for the University of North Carolina system, which regulates the school, didn’t have a comment.

A closure would instantly make the school’s current students eligible to have their federal student loans canceled. North Carolina Attorney General Josh Stein estimates that some 350 recent students should be able to erase $23.6 million of debt. Some 100 students were enrolled as of June, according to the UNC system, with an additional 70 on temporary leave.

Loan cancellations would leave a hefty bill for the feds in the form of forgone future interest payments. The Education Department would have the right to seek reimbursement from Charlotte Law’s owners, which also own two other law schools: Arizona Summit and Florida Coastal. The law schools are indirectly owned by two funds operated by Sterling Partners, a Chicago-based private equity firm.

Charlotte Law’s troubles began in December, when the Education Department concluded that the school had misled its students about its accreditation and the bar-passage rates of former students and then cut off Charlotte Law’s access to federal student aid funds. The school denied the allegations and spent several months trying to convince the feds to reverse their decision. Charlotte Law hired Lauren Maddox, a lobbyist with the Podesta Group in Washington, to influence Congress and the Education Department. Maddox had previously steered Education Secretary Betsy DeVos through her confirmation hearings. The department offered the school a lifeline after it hired Maddox.

The school still had to persuade its accreditor and state regulator that it was financially viable and should remain open. It appears that those efforts ultimately failed.

    Before it's here, it's on the Bloomberg Terminal.