The U.S. Department of Education moved Tuesday to cut off access to federal financial aid for Globe University and the Minnesota School of Business, an action that could force the troubled chain of for-profit colleges to close.
Letters from the federal education department to Jeffrey Myhre, president of the Woodbury-based colleges, cited a September court ruling that the schools defrauded students enrolled in criminal justice programs as reason to not recertify the schools for the federal aid programs. The letters also said the schools misled students about whether credits they earned could be transferred to other institutions.
Globe and the Minnesota School of Business will no longer be able to participate in the federal student loan program after Dec. 31, the letters said. The school is able to appeal the ruling by offering evidence to refute the department’s findings.
Losing access to student loans could have serious financial consequences for the schools, where most students rely on financial aid and the majority receive federal loans and grants. Similar actions led to the closure of ITT Technical Institute and the sale of the Corinthian chain of colleges.
“This is a sad day for two long-standing private institutions,” Myhre said in a statement noting both colleges were founded in the late 19th century. “Today’s decision continues the destructive actions taken by Minnesota Attorney General Lori Swanson and the Obama Administration against career-focused institutions.”
Myhre added that the court found only a fraction of the colleges’ students were “unintentionally misled” and that the criminal justice program was ended in 2014.
“It’s unfortunate that the Attorney General and the Department of Education decided to sanction the schools in their entirety,” Myhre said. “Instead of helping students in one program, their actions will eliminate options and tarnish the degrees of thousands of graduates.”
The move to deny access to federal student loans is the latest in a string of trouble for the two colleges.
Swanson filed a lawsuit against the schools in 2014 alleging fraud and other misconduct after hundreds of students filed complaints with her office. In September, a Hennepin County District Court judge found the schools defrauded students in its criminal justice program by leading them to believe the program would help them become police or probation officers.
Shortly after September’s fraud ruling, the Minnesota Office of Higher Education said it was revoking the schools’ authority to operate in Minnesota. The federal education department has also restricted the schools’ ability to enroll new students.
The schools are also in need of a new oversight agency after the Accrediting Council for Independent Colleges and Schools, or ACICS, asked school officials to make a case for keeping the schools open. The U.S. Department of Education is also in the process of revoking ACICS’ accrediting powers.
Federal data from 2015 show the schools had 19 campuses in Minnesota, Wisconsin and South Dakota that enrolled more than 4,500 students. After the fraud trial began in April, the schools said they were closing several Minnesota campuses and consolidating others.
About 1,700 Minnesotans were enrolled in the schools as of September, state officials said.