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Editor: Paul L. Caron
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Monday, December 19, 2016

It Begins . . . Department Of Education Cuts Off Federal Student Loans For Charlotte Law School, Effective Dec. 31

FCFollowing up on my previous post, ABA Places Charlotte Law School On Probation, Censures Valparaiso: U.S. Department of Education, Charlotte School of Law Denied Continued Access to Federal Student Aid Dollars:

The U.S. Department of Education today announced that on Dec. 31, 2016, it will end access to federal student financial aid for Charlotte School of Law (CSL), a for-profit member institution in the InfiLaw System. This action furthers the Department’s commitment to vigorously protect students, safeguard taxpayer dollars, and increase institutional accountability among postsecondary institutions.

Following a review of the relevant information, the Department concluded that CSL’s non-compliance with the fundamental standards set by its accreditor, the American Bar Association (ABA), resulted in its violation of the Higher Education Act, the Department’s regulations, and CSL’s Program Participation Agreement with the Department. Additionally, the Department concluded that CSL made substantial misrepresentations to current and prospective students regarding the nature and extent of its accreditation and the likelihood that its graduates would pass the bar exam. Both findings merit denial of the school’s request for continued participation in the federal student aid programs.

“The ABA repeatedly found that the Charlotte School of Law does not prepare students for participation in the legal profession. Yet CSL continuously misrepresented itself to current and prospective students as hitting the mark," said U.S. Under Secretary of Education Ted Mitchell. “CSL’s actions were misleading and dishonest. We can no longer allow them continued access to federal student aid.”

On Nov. 14, 2016, the ABA announced that CSL was placed on probation, citing the school’s non-compliance with several standards necessary to maintain its accreditation with the ABA, including the requirements of:

  • Maintaining a rigorous program of legal education that prepares its students, upon graduation, for admission to the bar and for effective, ethical, and responsible participation as members of the legal profession;
  • Maintaining sound admission policies that are consistent with the school’s mission, and the objectives of the school’s program of legal education; and,
  • Refraining from admitting applicants who do not appear capable of satisfactorily completing its program of legal education and being admitted to the bar.

The ABA first informed CSL of its non-compliance in February 2016, and did so again in July 2016. On both occasions, the school failed to disclose this finding to current and prospective students, despite its admission that the information would have a profound impact on their enrollment decisions. Instead, CSL continued to represent itself as in full compliance with the ABA’s standards. The ABA afforded CSL two opportunities to provide evidence and oral testimony of its compliance with the ABA’s standards. On both occasions, the ABA affirmed its determination of CSL’s non-compliance, and in October 2016 placed CSL on probation. When considering the school’s request for recertification, the Department considered these and other facts and made an informed judgment about the institution’s administrative capability and performance as a fiduciary of federal funds.

Today’s action denies CSL’s request to be recertified to continue its participation in the federal student aid programs. Effective Dec. 31, 2016, CSL’s participation in those programs will end, and beginning Jan. 1, 2017, students may no longer use federal student aid to attend the school.

During the 2015-16 award year, CSL enrolled 946 federal aid recipients and received approximately $48.5 million in federal student aid funds, primarily federal student loans. CSL has until Jan. 3, 2017 to submit evidence to dispute the Department’s findings.

Over the last three fiscal years, the Department has denied recertification applications for more than 40 institutions, including Marinello Schools of Beauty, Computer Systems Institute, and Medtech College.

(Hat Tip: John Edwards.)

http://taxprof.typepad.com/taxprof_blog/2016/12/it-begins-department-of-education-cuts-off-federal-student-loans-for-charlotte-law-school-effective-.html

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Comments

Let's demand that all student loans be cut off for the Electoral College!

Posted by: PaulB | Dec 19, 2016 2:45:47 PM

More death penalties, please.

Posted by: Anon | Dec 19, 2016 2:53:44 PM

It's about time -- Great, great news!

Posted by: lawprof | Dec 19, 2016 3:03:40 PM

My mommy let me use the Internet today.

Posted by: PaulB | Dec 19, 2016 4:20:17 PM

One waits with great anticipation to see if "Data" exhorts Charlotte 0Ls to just go ahead and borrow $70k per year in private student loans because wage premium.

Posted by: Unemployed Northeastern | Dec 19, 2016 6:32:00 PM

Paul,

It begins is right. This may signal a major change in law schools and legal education. This may be the beginning of several law schools closing, and other schools reacting, hopefully positively, to prevent it happening to them. I expect this will be a major topic at AALS.

Posted by: Scott Fruehwald | Dec 19, 2016 6:55:56 PM

@ UNE,

One waits with equal anticipation to see if private lenders actually fill this gap. Paul Campos on his blog states that Feds cut off funds, the school will go out of business immediately. I tend to agree with that. I know you and others have been on record saying that private lenders are eager to loan even to this demographic. This should be a great bell-weather case on what impact the loss of federal loans will have on a lower ranked school.

Posted by: JM | Dec 20, 2016 8:04:12 AM

I humbly suggest that this will be a "big deal". Does anyone know if this change will still apply if the school files an appeal? Are all returning 1L, 2L and 3L students completely out of luck? Also, I remember that before CharlotteLaw recv'd accreditation (and fed loans) it loaned money to students directly when private banks would not circa 2008 crash. Maybe it will just do that again.

Posted by: anon | Dec 20, 2016 9:43:34 AM

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