Dive Brief:

• More than 80 federal legislators criticized the U.S. Education Department's handling of the Dream Center's attempt to purchase and operate a trio of colleges, writing in a letter last week obtained by Education Dive that the resulting closures "signal a pattern of severe mismanagement and dereliction of duty" at the department, which they allege was "complicit" in the nonprofit's "efforts to mislead students."
• The Ed Department should not have allowed Dream Center to buy the "financially troubled" for-profit Argosy and South universities and The Art Institutes, they wrote, going on to criticize its involvement with the college chains since.
• The legislators made several requests of the department, including to ease students' ability to get a closed-school discharge and access their records. They also asked the department to deny any nonprofit conversion requests of institutions previously owned by Dream Center. They set a March 27 deadline for the department to respond.

Dive Insight:

"The Department has a responsibility to protect students and taxpayers — a responsibility it has failed to uphold," the legislators wrote. They noted that "this was not the Department's first exposure to Dream Center," explaining that during the Obama administration it prevented Dream Center from buying the embattled (and since-closed) ITT Technical Institute.

The social services-focused Dream Center's lack of higher ed experience was one reason the deal was scuttled, Buzzfeed reported in August 2017, as was officials' reluctance to implement reforms suggested by the department. The Trump administration's move to green-light the deal, however, is an outcome of its broader rollback of regulatory oversight of the sector, allowing for-profit colleges to seek cover from regulation and explore new educational delivery models.

In their letter last week, federal legislators criticized the department for not intervening when, during the ownership handover with Education Management Corp., the Dream Center presented its entities as nonprofits although, they said, the department had only provisionally approved the ownership change. And when some campuses lost accreditation, "[t]he Department did nothing," they contend, while Dream Center "actively and willfully misled students … to believe that their schools were still accredited." 

The legislators also criticized the department over its role in the mismanagement of $13 million in Title IV stipends reportedly not distributed to students.

When the department did intervene to strip Argosy of its access to federal financial aid and deny its application to change ownership and convert to a nonprofit, it was "simply too little, too late," they wrote.

Dream Center's attempt to run the colleges was troubled from the start, but the speed of its collapse picked up in recent weeks as the nonprofit operator attempted to reorganize through receivership. The bottom fell out earlier this month, when the Ed Department removed its access to Title IV funding. That caused campuses across the country to shutter despite word from a court-appointed receiver that many had found buyers. (The department, which recommended bankruptcy for Dream Center, has set up a closed schools page for Argosy and Art Institutes students.)

Now, some 9,600 students have "burdensome debt, incomplete degrees, and few options for recourse," the legislators wrote. "Students deserve better."