The beleaguered Charlotte School of Law finally got some good news earlier this month when the U.S. Department of Education released federal loan money to some students just days before the spring semester ended. That development comes several months after the school hired a trio of lobbyists to make its case in Washington, one of whom helped shepherd Education Secretary Betsy DeVos through the confirmation process in January.
Charlotte had pushed unsuccessfully for the disbursement of the spring semester loans since December, when the Education Department withdrew the school’s federal loan eligibility—the lifeblood of colleges and universities—amid concern over the school’s accreditation status and admissions practices. The law school argued that students who had been approved for federal loans for the full school year were entitled to the entire amount, regardless of the timing of the department’s decision to cut it off from federal loans. An Education Department spokesman said last week that he did not have any information about the school’s federal loan status. Charlotte law spokeswoman Victoria Taylor confirmed that eligible students had received their federal loans for the spring. She declined further comment.
Robert Barchiesi, a former Charlotte student who sued the school for fraud, said he had heard from some of his old classmates that they’d received their loan money.
Charlotte offers an extreme example of the pressures bearing down on lower-tier law schools in recent years. Its predicament and uncertain future is the culmination of decisions administrators made amid a climate of declining enrollment, falling bar-pass rates, and a stagnant entry-level job market. The fledgling Indiana Tech Law School closed this month due to those reasons, and Whittier College administrators have said they intend to shut down the struggling Whittier Law School once the current students graduate.
It’s unclear what the release of the spring semester loans means for the future of Charlotte, which laid off a large portion of the faculty in January as students left in droves.
The teetering school has asked the Education Department to reinstate it to the federal loan program, but had not received a response as of May 5, according to an email to students from president Chidi Ogene. The school appears to be pushing its case in Washington—Charlotte retained three lobbyists from the Podesta Group in February at a cost of $50,000, according to disclosure forms. That team includes Lauren Maddox, who prepped DeVos for her confirmation hearings. Maddox did not respond to requests for comment.
“The current appearance is that they got the deal they were hoping for and will now try to find some way to weasel their way back in [to the federal loan program],” said Ben Miller, a senior fellow at the Center for American Progress who studies higher education policy. “Certainly there is a reason for Charlotte to be more optimistic than it was.”
The Education Department might have imposed restrictions or conditions on the school in order to release the spring loans, Miller noted, but neither the school nor the department has disclosed any such terms. Under the Obama administration, the Education Department signaled a willingness to make federal students loans available in the short term on the condition that Charlotte close up shop this month. That closure timeframe would have ensured the ability of Charlotte students to discharge their federal loans through a program meant to protect students at colleges and universities that shut down. Their eligibility for that program is now in question.
Robert Shireman, a former Education Department official who is now a fellow at The Century Foundation, cautioned against reading too much in the government’s release of the spring loans to Charlotte students. The Education Department may have purposefully waited until the end of the semester to release the money simply to avoid a situation in which the owners of the for-profit law school pocket taxpayer-backed loans for the semester then immediately close down the school—a practice not unheard of in the world of for-profit higher education.
If that’s the case, it doesn’t necessarily mean that the Education Department under President Donald Trump and DeVos is more sympathetic to Charlotte’s plight than their predecessors, Shireman said.
“From a legal standpoint, [the Education Department] probably didn’t want to appear to leave themselves vulnerable to due process complaints, so they went ahead and eased up a little bit,” Shireman said. “I wouldn’t say it necessarily means anything about a reinstatement coming in the future.”
Yet, both Shireman and Miller said that DeVos’ Education Department has already taken a gentler approach to the for-profit college industry, which was subject to a number of new rules under former President Barack Obama. DeVos has rolled back or delayed some of those initiatives, and Trump himself owned a for-profit entity he called a university, Shireman noted.
Charlotte leaders said as early as January that they were hoping for a reversal under a Trump administration, and they aren’t taking any chances, as evidenced by hiring lobbyists with ties to DeVos.
“It sounds like they’re buying access,” Shireman said. “Paying someone who has demonstrated access—there’s a lot of history that indicates that works.”
The Podesta Group team is undoubtedly working to help Charlotte return to federal loan eligibility, and they may also be working to ensure that any adverse developments at Charlotte don’t negatively impact the two other schools in the InfiLaw network, Miller said. The for-profit InfiLaw Inc. owns the Florida Coastal School of Law and Arizona Summit Law School, in addition to Charlotte.
Getting reinstated to the federal loan program would hardly bring an end to Charlotte’s woes, Miller noted. It would simply resolve its most pressing problem.
Charlotte remains on probation with the American Bar Association and could lose its accreditation without improving the academic credentials of the students it enrolls. The ABA’s accreditation body placed the school on probation in November after concluding that it was violating rules intended to ensure law schools don’t enroll students with little chance of graduating and passing the bar. Should the school lose ABA accreditation, it would likely close anyway, Miller said.
Moreover, the University of North Carolina system’s board of governors, which oversees the licensing of higher education institutions throughout the states, has launched an external review of the school.
Separately, Charlotte is under investigation by North Carolina Attorney General Josh Stein for possible violations of the state’s consumer protection laws. Investigations can slowly kill a school, though not as quickly as being cut off from federal loans, Miller said.
And then there are the various lawsuits filed against the school by students claiming it should have disclosed its ABA accreditation problems much sooner. Charlotte faces at least three separate class actions and a fourth suit filed by an individual student. The school has moved to dismiss most of the cases, arguing that it followed ABA protocols and remains accredited.
“Are the steps the [Education] Department is taking making it more likely that Charlotte School of Law exists in the fall of 2017? Yes,” Miller said. “But there are still very real threats to this school.”
The law school’s survival for another semester isn’t necessarily good news for Charlotte students who opted to withdraw or take leaves of absence when it lost federal loan eligibility, Miller added.
The Closed School Discharge Rule allows students to discharge their federal loans if their institutions close and they choose not to transfer their credits to another program. But the rule only applies to students who were currently enrolled or who withdrew no more than 120 days before the institution closed. By releasing the spring federal loans and helping Charlotte stay afloat, the Education Department could make it impossible for students who withdrew to walk away from their loan debt.
Stein, the North Carolina attorney general, wrote to the Education Department in April with a request that it extend that 120-day period, arguing that situation entailed “exceptional circumstances.” A spokeswoman for Stein said May 18 that the Education Department has not yet responded to that request.
“If this was money released to help a couple students get across the graduation line then the school will be shut down as it should be, then it makes some sense,” Miller said of the spring-semester federal loan disbursement. “If it’s prolonging the inevitable [closure] with no plan in place, then it’s just going to end up costing more taxpayer money and students’ time along the way.”