Dive Brief:
- The eight remaining colleges in the Art Institutes system will permanently shut down this week, according to an online announcement, bringing an abrupt end to the financially distressed career college chain.
- In an email to students Friday, the system said it was unable to “absorb the impact that the COVID-19 pandemic had on schools teaching hands-on and equipment-intensive programs” such as fashion design, according to local media reports.
- The system — with campuses in Florida, Georgia, Virginia and Texas — was once a collection of colleges spanning dozens of campuses, but its footprint diminished after prolonged enrollment and legal struggles.
Dive Insight:
The Art Institutes — which has changed ownership twice since 2017 — has dealt with enrollment challenges, legal troubles and chronic instability. Students and faculty members were warned about the closure Friday, according to local news reports, giving them just about one week’s notice.
“A culmination of events over the past decade, both external and internal to the campus operations, has forced the closure of this system of colleges,” the email said.
On its website, the Art Institutes said it encourages students to complete their education at other colleges and is working “with numerous partners” to ease transfers. However, as of Monday afternoon, the site did not appear to have a list of transfer partners.
Belle Wheelan, president of the Southern Association of Colleges and Schools Commission on Colleges, the colleges’ accreditor, said via email Monday that the institutions have conditional plans to teach out their students, but they have not finalized all of them.
The Art Institutes site also referred students to relief programs from the U.S. Department of Education, including those that wipe away federal student debt for borrowers whose colleges closed suddenly or misled them. However, those programs have been hamstrung by a federal court order temporarily blocking new Education Department regulations from taking effect.
The system can trace its current troubles back to events that began about a decade prior under one of its former owners, the for-profit Education Management Corp, or EDMC.
Although the Art Institutes saw enrollment boom during the Great Recession, student headcounts began to fall when the economy recovered. That led EDMC to lay off hundreds of employees in 2012. Just three years later, the company closed 15 Art Institutes.
Around that time, the company also ran into issues with the U.S. Department of Justice and its accreditor. In 2017, EDMC sold its college assets to the Dream Center Foundation, a faith-based organization that set up a nonprofit to operate the institutions.
Yet that company also struggled to keep the Art Institutes afloat.
The Dream Center, which had no experience running colleges, ran into its own legal troubles.
In a class-action lawsuit filed in 2018, students alleged that Art Institutes in three states temporarily lost their accreditation and didn’t tell students.
That same year, the colleges’ new management said revenue was well short of EDMC’s projections. In 2019, it entered an agreement to sell the remaining eight Art Institutes and other college properties to the system’s current owner, the Education Principle Foundation.
The colleges have continued to struggle with enrollment under their new ownership. For instance, the Art Institute of Atlanta had 1,246 students in 2018, according to federal data. By 2021, enrollment dropped to just 586 students.
The Education Principle Foundation did not immediately respond to a request for comment Monday.
