Press Release

Attorney General Ellison seeks more federal help for students unfairly harmed by closure of Argosy University and Art Institues

Co-leads letter of 30 AGs to ask Secretary DeVos to expand ‘closed school discharge’ to more students of schools closed after owner’s misconduct and mismanagement

October 17, 2019 (SAINT PAUL) — Minnesota Attorney General Keith Ellison announced today that he co-led a bipartisan coalition of 30 state attorneys general in seeking expanded federal relief for students unfairly harmed by the recent closure of Argosy University and Art Institutes at the hand of the schools’ owner, Dream Center Education Holdings.

In a letter released today that Attorney General Ellison co-led with Oregon Attorney General Ellen Rosenblum, he and the other attorneys general urge U.S. Secretary of Education Betsy DeVos to exercise her legal authority to expand the group of students eligible for “closed school discharge” and account for the extraordinary misconduct and mismanagement by Dream Center.  Due to the schools’ abrupt closure, many Minnesota students were left unable to obtain the degrees they were promised, yet are still left responsible to repay student-loan debt they accrued to attend the failed schools.

“Argosy and Art Institutes students were just trying to get an education and better afford their lives. But because of misconduct and mismanagement by the schools’ owners, those students were not only blocked from achieving their goals, they were left saddled with debt and nothing to show for it. That’s wrong,” Attorney General Ellison said. “I co-led a group of 30 attorneys general to ask Secretary DeVos to exercise her authority under federal law to discharge these unfair debts.”

Dream Center’s schools included Minnesota’s Argosy University campus, which was located in Eagan and abruptly closed in March of this year. Minnesota students also attended online campuses of Argosy and Art Institutes. In total, more than Minnesota 1,700 students who attended Argosy and Art Institutes discontinued their studies since October 17, 2017, when Dream Center took over the troubled schools.

While some students that attended these schools have been eligible for discharge of their student loans, that group is limited to those who attended within 120 days of the schools’ closure date. That means that students who, due to Dream Center’s mismanagement and instability, stopped attending the schools more than 120 days before Dream Center closed the schools and are not able to compete their education elsewhere will continue to face collection on federal loan debts for which they received nothing in return.

The Secretary of Education, however, has the ability to expand the group of students entitled to discharge and ensure that everyone who justifiably withdrew from Argosy and the Art Institutes after October 17, 2017 and is unable to complete their program at another school can obtain relief from their federal student loans. Indeed, as Attorney General Ellison and the attorneys general assert, that is how the law is designed.

Dream Center’s misconduct and mismanagement

As Attorney General Ellison and the attorneys general detail, Dream Center’s takeover of the schools was deeply troubled from the start. Their letter highlights that a “wide variety of regulators, including the U.S. Department of Education, found that Dream Center violated numerous federal and state laws, was noncompliant with accreditors, and grossly mismanaged its schools — including Argosy University, the Art Institutes, and South University — leading to the schools’ recent closures.” Two egregious examples include:

  1. Dream Center failed to inform students that two of its schools lost their accreditation for several months—during which time students registered for additional terms and incurred additional debts for credits that could not be used.
  2. Dream Center failed to distribute over $16 million in federal loan credit balance refunds to students. These were student loan stipends that often used for food and housing expenses.

In  Minnesota, Dream Center withheld approximately $150,000 in State grant and loan funds from Argosy students in the 2018-19 academic year. By not disbursing these State grant and loan funds to its students, Argosy’s owner breached its agreements with the State of Minnesota and violated Minnesota law.

The letter that Attorney General Ellison and Oregon Attorney General Rosenblum led is co-signed by the Attorneys General of California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington and Wisconsin. A copy of the letter is available on Attorney General Ellison’s website.