Dive Brief:

• Four students are suing the nonprofit Dream Center Education Holdings (DCEH), alleging the college operator misled them over the accreditation of four Art Institutes, according to the Pittsburgh Post-Gazette. DCEH did not respond to Education Dive's request for comment.
• The suit alleges DCEH stated in its course catalog that it remained accredited this year after its accreditor, the Higher Learning Commission, pulled accreditation in January, and students didn't find out the status until June, the Post-Gazette reported. Those campuses would go on to shutter as part of a larger wave of closures in the Art Institutes system after its sale last year.
• DCEH, owned by the nonprofit Dream Center Foundation, bought the Art Institutes from the for-profit Education Management Corporation (EDMC) last year after the company went into Chapter 7 bankruptcy. Also included in the deal were Argosy University and South University.

Dive Insight:

Before there were lawsuits against DCEH, there were upset students who felt betrayed about the Art Institutes' abruptly announced closures earlier this year. As one student told the Chicago Tribune in July after a local Art Institute closed: "I literally wasted money from January until now. I already spent $16,000 in credits that aren't transferable. It's a slap in the face."

The Art Institutes network has recently experienced a steep decline in campuses, with a quarter of the footprint it had three years ago, according to the Post-Gazette, which noted in an August article the colleges "promised the prestige of an art school with the practical skills of  trade school meant to propel people into good-paying, middle class jobs."

The Dream Center Foundation described its acquisition of the Art Institutes and other colleges from a for-profit company as "an amazing opportunity" to "turn those systems into community focused not-for-profit educational institutions." The foundation saw opportunities to combine the colleges with its other charitable programs, such as by offering GED programs on campuses, providing scholarships and connecting graduates to jobs through the Dream Center Network.

The Art Institutes' sale appears to be behind the accreditation problems. In the lawsuit, according to the Post-Gazette, plaintiffs allege the Higher Learning Commission first notified the Dream Center that it temporarily removed accreditation for the four campuses while it reviewed the sale. It told the Dream Center to publicly post the updated status and notify students. The accreditor reaffirmed the decision in November.

The dominos can fall rapidly after an accreditation loss, which can block financial aid and limit job prospects for graduates. The Art Institutes' sudden closures reflect the quick collapse of some for-profit chains, such as Corinthian Colleges and, more recently, Education Corporation of America, which shut its doors soon after its accreditation was suspended.

The day after ECA lost accreditation, the for-profit operator shut down all but one of its colleges, which included Virginia College and Brightwood Career Institute. The results could be dire for students, and the closures prompted a sharp rebuke from the U.S. Department of Education. A spokesperson for the department wrote in a statement that "[i]nstead of taking the next few months to close in an orderly fashion, ECA took the easy way out and left 19,000 students scrambling to find a way to finish."