Negotiations between the U.S. Department of Education and the Charlotte School of Law to allow current students to complete their studies at the beleaguered school have broken down, calling into question whether Charlotte will reopen Monday as planned.
In a letter to students Wednesday, Education Department undersecretary Ted Mitchell wrote that the school has walked away from a tentative deal that would have allowed its roughly 700 students to continue attending classes under the instruction of faculty from another law school and entitle them to certain refund and loan discharge options. Administrators at Charlotte, which is North Carolina’s largest law school, have been scrambling to keep the school open since the Education Department announced on Dec. 19 that it would cut off access to federal student loans due to what it said were accreditation shortfalls and misinformation about the performance of graduates on the bar exam.
“[Charlotte], however, has since rejected what it had previously accepted and has informed the Department that it will not be accepting the conditions set,” Mitchell wrote.
Meanwhile, the Charlotte Observer reported that the school has fired as much as two-thirds of its faculty and staff in recent days.
A law school spokeswoman did not respond to requests for comment Thursday morning, but the school released its own response Thursday calling the Education Department’s actions “reckless” and disputing its stated reason for the negotiation’s failure. It also indicates that school leaders are hoping for a reversal once the Trump administration takes over.
“The bottom line for the current leadership in the Department is that the School must immediately close,” said the statement from dean Jay Conison and President Chidi Ogene. “Students graduating in May would receive their Charlotte School of Law J.D. However, every other student would find himself or herself out of school at the end of May.”
Conison and Ogene previously said that they were working on a plan to partner with another law school to enable current students to finish their degrees at Charlotte and that they were negotiating with the Education Department on student funding.
The hope was the students who had previously received federal loans would continue to do so this semester, and the school said eligible students would see their accounts credited with that amount in anticipation of such a deal.
But the Education Department made clear Wednesday that no such loans are forthcoming. “[Charlotte] is no longer recognized to participate in federal student aid programs, and students will not be able to receive federal student aid at [Charlotte] for current or future attendance,” according to the letter.
The specific cause of the impasse between the two parties is unclear, though the Education Department listed three critical conditions:
• That all courses be taught by the school’s teach-out partner, which in this case was to be the Florida Coastal School of Law, a for-profit law school owned by InfiLaw Corp., which also owns Charlotte.
• That all first-year students be eligible for full refunds, and that others who don’t finish their studies be eligible for a “closed school loan discharge,” which would allow them to walk away from their law school loans.
• That any additional federal loans “be provided in a manner that does not create risk to taxpayers.”
The letter does not clarify whether the school objected to one or all of those provisions, though it hints that Charlotte was uninterested in Florida Coastal professors handling all of Charlotte’s teaching.
In their Friday letter to students, the Charlotte administrators said they were looking at securing alternative financing sources.
Should the school reopen this semester without the Education Department’s blessing, it will jeopardize the ability of current students to discharge their federal loan debts through the closed school loan discharge process, according the department’s Wednesday letter. That program is intended to protect students at institutions of higher education that close by allowing them to get rid of their federal loan debt should they choose not to continue their degrees elsewhere.
“Unfortunately, should [Charlotte] remain open in a manner in which it — and not a teach-out partner — continues to provide educational instruction, the law restricts the Department’s ability to provide a closed school loan discharge to otherwise eligible students because that school will not, in fact, be closed,” the letter reads.
Meanwhile, the Education Department last week faulted the school’s prospective teach-out partner, Florida Coastal, for graduating students with high debt and relatively low earnings. Florida Costal was one of two law schools to fail the Education Department’s new “gainful employment” rule.
Contact Karen Sloan at email@example.com. On Twitter: @KarenSloanNLJ.