The Art Institutes

The Art Institutes
The Art Institutes logo
Established 1969 (1969)
Focus Nonprofit institution[1][2]
President Charles Restivo[3]
Owner Dream Center Education Holdings (DCEH), LLC
Location California, US
Coordinates 40°26′31″N 79°59′59″W / 40.441947°N 79.999828°W / 40.441947; -79.999828
Website www.artinstitutes.edu

The Art Institutes (Ai) are a system of art colleges owned by Dream Center Education Holdings, a Pentecostal non-profit organization. At its height, The Art Institutes had greater than 50 campuses. However, as the for-profit education sector came under scrutiny, many campuses saw a marked decrease in enrollment. At least 35 schools closed in 2017-18. [4] [5]

In 2018, Dream Center Education Holdings reported that more Ai campuses would be closing in 2018.[6] Up to 13 Art Institute campuses may remain open. [7] [8]

The schools offer master's degrees, bachelor's degrees, associate degrees, and certificates in visual, creative, applied, and culinary arts.[9]

The Art Institutes' former parent company, Education Management Corporation (EDMC), was headquartered in Pittsburgh, Pennsylvania.[10] In November 2014, EDMC was delisted from the NASDAQ amid financial difficulties, lawsuits, and investigations[11] and its stock is valued at less than one cent per share.

Educational accreditation of The Art Institutes and their programs varies among campuses and programs. One of its accreditors, Accrediting Council for Independent Colleges and Schools (ACICS), has been criticized by a dozen states' Attorneys General for its lax standards.[12]

Art Institutes in Colorado, Chicago and Schaumburg, Illinois, and Detroit are not accredited. [13]

In June 2016, the US Department of Education voted to end ACICS power to accredit.[14] ACICS was stripped of its power to accredit in September.[15]

In December 2016, nine additional Art Institutes were placed on probation by their accreditor, Southern Association of Colleges and Schools (SACS).[16]

Thousands of former students of the Art Institutes claim they have been deceived and misled by the schools and their recruiters and have filed claims with the US Department of Education.[17][18][19] Art Institute students are able to file defense to repayment claims with the US Department of Education.[20]

In 2017, Education Management Corporation reported that it had sold the existing Art Institutes to The Dream Center Foundation, a Los Angeles-based Pentecostal organization.[21][22] The sale was complete in October 2017.[23]

History

The Art Institutes system was created in 1969 when Education Management Corporation (EDMC) acquired The Art Institute of Pittsburgh,[24][25][26] which was founded in 1921.[27]

Starting in 2000, The Art Institutes began offering bachelor's degrees[28] and, in 2001, launched its distance education program, Art Institute Online, which began offering bachelor's and non-degree programs online.[26][29]

Throughout the 2000s, The Art Institutes expanded through the acquisition of existing art colleges and the establishment of new Art Institutes.[30] In 2001, there were around 20 campuses of The Art Institutes;[26] this grew to approximately 30 locations in 2006[31] before reaching 50 Art Institutes in 2010.[32]

EDMC's initial public offering (IPO) was in 2009. Todd S. Nelson, who was previously the CEO of Apollo Education Group, became an EDMC board member in 2007 and the Chairman of the Board of Directors in 2012.[33]

In 2011, Frontline released a documentary titled Educating Sergeant Pantzke. In the documentary, Iraq war veteran Chris Pantzke discussed the lack of disability services at the school. According to Pantzke, "Being a soldier, you don’t want to quit, you don’t want to give up or fail." After doing his own research, Pantzke concluded that the degree he was pursuing wasn’t "worth much more than the paper is worth," and felt he was "throwing away taxpayer money" by using GI Bill funds.[34]

Since 2012, The Art Institutes schools experienced a decrease in the number of new students enrolling, seeing enrollment numbers drop by approximately 20 percent between the second quarter of the 2012 fiscal year and the start of 2013. EDMC has attributed the drop in enrollment to limited access to Parent Loan for Undergraduate Students and the economic recession.[24] In February 2013, EDMC announced plans for a three-year-old tuition freeze at The Art Institutes. Under this plan, the company pledged to maintain the current cost of tuition through 2015.[35]

In June 2013, EDMC announced that its President John Mazzoni would resign effective July 14, 2013, after 27 years at the organization. Charles Restivo, Group Vice President, would become the Interim President of The Art Institutes.[36]

In 2014, the US Department of Education reported that ten EDMC campuses, including several Art Institutes, were placed under heightened cash monitoring. The Art Institute of Pittsburgh was one of the schools listed.[37]

In May 2015, EDMC announced that it would be closing the doors of 15 of the Art Institute locations. "A total of 5,432 students are enrolled among the campuses that are slated to close, according to a list provided by EDMC. The company will undergo a teach out process at each location, meaning each campus will continue to offer courses, student services and placement assistance until the last student has graduated, according to Hardman." Some of the campuses slated to close include ones in Atlanta, Ohio, New York City, Texas and Pennsylvania.[38] In January 2016, EDMC announced that additional Art Institutes would be ceasing enrollments. These campuses are The Art Institute of California - Los Angeles, The Art Institute of St. Louis, and the Art Institute of Tucson. This brought the total number of Art Institutes campuses slated for closure to 18.[39] At least 200 additional employees were laid off in May 2016.[40] In June 2016, EDMC announced that the Art Institutes International Minnesota would be ceasing enrollments. That brought a total of 19 Art Institute campuses scheduled for closure.

In June 2016, Tim Moscato, chief operating officer at the Art Institutes, resigned amid more downsizing.[41]

On September 8, 2016, Art Institutes students known as "I Am Ai" presented a notice to the Director of New England Institute of Art (NEIA) about a lawsuit that would be coming in 30 days.[42] The lawsuit is being written by the Legal Services Center of Harvard Law School.[43] On September 24, 2016, the Attorney General of Massachusetts expressed concern that the teaching duties at NEIA were being taken over by an unlicensed Indian company with no background in teaching US art students. The AG’s Office stated that if a proper education for NEIA students could not be ensured, that NEIA should shut down at the end of the 2016.l[44]

Politico added that an Indian company might be buying the Art Institute of New York City and NEIA.[45]

In July 2017, an accrediting agency, Middle States Association, rejected the sale of the Pittsburgh and Philadelphia Art Institutes to the Dream Center Foundation.[46]

Schools and programs

Fort Lauderdale Institute building

As of February 2018, there were 31 Art Institutes continuing to enroll new students. The Art Institutes schools account for about half of all EDMC schools[47] and more than half of EDMC's total student population.[24]

The Art Institutes offer degree programs at the associate's, bachelor's and master's levels, as well as non-degree diploma programs. Areas of study include graphic design, media arts and animation, culinary arts, photography, digital filmmaking and video production, interior design, audio production, fashion design, game art and design, baking and pastry, and fashion marketing.[48]

The Art Institutes in Fort Lauderdale, Indianapolis, Kansas City, Las Vegas, Minnesota, New York City, Phoenix, Saint Louis, Salt Lake City, Tucson, Vancouver, Wisconsin, and York were accredited by ACICS,[49] which has lost its accreditation power from the US Department of Education.[15]

Nine additional Art Institutes (The Art Institute of Atlanta, The Art Institute of Houston, Miami International University of Art and Design) and their branch campuses in Charleston, Nashville, Arlington, Virginia Beach, Austin and San Antonio were placed on probation by their accreditor, Southern Association of Colleges and Schools (SACS), in December 2016.[16]

In August 2018, The Pittsburgh Tribune-Review reported that the Art Institute of Pittsburgh may lose their accreditation by November.[50]

Locations

Open

Not accepting new enrollments

Closed or sold campuses

Teach-outs

Teach-outs are a period of time when new student enrollment has stopped, and remaining students are given a period of time to finish their programs.[20] In May 2015, EDMC spokesperson Chris Hardman stated that the teach-outs would take two to three years.[51] According to the New York State Department of Education, The Art Institute of New York City is expected to close by September 2017.[52]

Accreditation Issues

The Art Institute of Las Vegas is accredited by ACICS, however the Interior Design Bachelor of Arts, Media Arts & Animation Bachelor of Science, Baking & Pastry Associate of Science, Culinary Arts Diploma program were placed on student achievement show-cause due to material noncompliance with its retention rate standard of 60%.

Art Institute of Pittsburgh was placed on probation by the Middle States Commission on Higher Education because of insufficient evidence that the institution is currently in compliance with Standard II (Integrity), Requirement of Affiliation 14, and the Related Entities Policy. The school will go through a probationary period until accreditation is reaffirmed or lost.

The regional accreditor, the Higher Learning Commission voted to voted to impose their Change of Control policy after the sale from EDMC to DCEH to the following campuses: Chicago, Schaumberg, Colorado, and Michigan. Moving them from accredited to candidacy status for a minimum of six months. Any credits earned after February 2018 are unaccredited institutionally.

Heightened cash monitoring (HCM)

As of June 1, 2016, twelve Art Institute campuses were under heightened cash monitoring (or HCM1) by the US Department of Education because colleges are required to hold a certain amount of money to meet obligations in case the school closes prematurely. Campuses affected were Pittsburgh, Portland, Philadelphia, Atlanta, Fort Lauderdale, Minnesota, Colorado, Houston, Seattle, New York City, York, and Phoenix. [53]

In October 2000, EDMC announced the settlement of a lawsuit brought by a group of approximately 350 former students of The Art Institute of Houston.[54][55] The plaintiffs claimed that "they were misled about the nature, quality and utility of the education they would receive at The Art Institute of Houston."

From 2011 to 2015, EDMC was involved in a United States Department of Justice investigation and lawsuit alleging both illegal recruitment practices by EDMC schools, including The Art Institutes, and fraudulent receipt of $11 billion in federal and state financial aid money.[56][57][58] A 2011 US DOJ report claimed EDMC "created a 'boiler room' style sales culture and has made recruiting and enrolling new students the sole focus of its compensation system."[59]

In May 2013, a federal judge in Pennsylvania rejected a bid to dismiss a lawsuit against EDMC by a former EDMC employee. The lawsuit alleges that the corporation and its affiliates engaged in a scheme to maximize profits from financial aid programs administered by the U.S. Department of Education. The complainant in the case, Jason Sobek, who worked as an admissions director for EDMC in Pittsburgh from June 2008 through November 2010, alleges that the firm falsified information given to the Department of Education that indicated they were in compliance with the loan programs’ eligibility requirements. In testimony that provided the basis for the lower court’s decision last October, Sobek alleged that EDMC operated a "carefully crafted and widespread for-profit education scheme [in which] defendants have defrauded the United States and its taxpayers out of millions of dollars in the form of federally backed student loans and grants."[60]

In 2014, an investigation by the San Francisco City Attorney's office led to a $4.4 million settlement. The city claimed Ai used deceptive marketing tactics resulting in underestimated program costs for students and inflated job placement figures for graduates.[61]

In November 2015, EDMC agreed to pay $95.5 million to settle claims of illegal recruiting, and consumer fraud. U.S. Attorney David Hickton said “Today’s global settlement sends an unmistakable message to all for-profit education companies: the United States will aggressively ferret out fraud and protect innocent students and taxpayer dollars from this kind of egregious abuse.”[18]

In April 2016, two former Ai teachers filed suit in Alameda City Superior Court claiming EDMC did not pay them a minimum wage or provide adequate rest periods "to reduce compensation and increase its own profits."[62]

References

  1. ↑ "Dream Center Education Holdings Completes Transition of Remaining Art Institutes Locations to Nonprofit Institutions". www.artinstitutes.edu. Retrieved 9 June 2018.
  2. ↑ "EDMC completes sale of schools to Dream Center". Retrieved 9 June 2018.
  3. ↑ "Officers - Charles Restivo". edmc.com. Retrieved 4 September 2015.
  4. ↑ https://www2.ed.gov/offices/OSFAP/PEPS/docs/oct17sec1.pdf
  5. ↑ Reports, Staff and Wire. "Roundup: Art Institute to relocate to Strip District; Atlanta Fed president leaving; more". TribLIVE.com. Retrieved 9 June 2018.
  6. ↑ https://www.republicreport.org/2018/dream-center-closing-numerous-ex-edmc-campuses/
  7. ↑ https://www.newsobserver.com/news/local/article214193329.html
  8. ↑ https://www.newsobserver.com/news/business/article214063704.html
  9. ↑ Alaimo, Carol Ann (2016-01-22). "The Art Institute of Tucson is closing". Arizona Daily Star. Retrieved 2016-05-30.
  10. ↑ Keller, Josh (2011-08-08). "Education Management Corp. Improperly Paid Recruiters, Prosecutors Say". The Chronicle of Higher Education. ISSN 0009-5982. Retrieved 2016-05-30.
  11. ↑ Fain, Paul (2014-10-28). "New Structure for EDMC". Inside Higher Ed. Retrieved 2016-05-30.
  12. ↑ Waldman, Annie (2016-04-11). "Attorneys General Come Down on Accreditor of For-profit Colleges". ProPublica. Retrieved 2016-05-30.
  13. ↑ http://www.post-gazette.com/business/career-workplace/2018/06/19/Deal-under-scrutiny-Art-Institutes-accreditation-setbacks-dream-center/stories/201806140022
  14. ↑ https://www.usnews.com/news/articles/2016-06-23/reglators-vote-to-shut-down-nations-largest-for-profit-accrediting-agency
  15. 1 2 https://www.usnews.com/news/articles/2016-09-22/education-department-strips-authority-of-acics-the-largest-for-profit-college-accreditor
  16. 1 2 "Southern accreditor places 10 on probation, including Louisville and new UT campus". Retrieved 9 June 2018.
  17. ↑ Pierrotti, Andy (2016-05-02). "KVUE Defenders Investigation: For-Profit Universities". KVUE. Retrieved 2016-05-30.
  18. 1 2 "For-Profit College Company to Pay $95.5 Million to Settle Claims of Illegal Recruiting, Consumer Fraud and Other Violations". United States Department of Justice. 2015-11-16. Retrieved 2016-05-30.
  19. ↑ Halperin, David (2014-03-31). "Stealing America's Future" (PDF). Republican Report.
  20. 1 2 "What Art Institutes Students Need to Know About Teach Outs & Campus Closures". 22 January 2016. Retrieved 9 June 2018.
  21. ↑ Douglas-Gabriel, Danielle (3 March 2017). "Art Institute campuses to be sold to foundation". Retrieved 9 June 2018 – via www.washingtonpost.com.
  22. ↑ "Inside Higher Ed's News". www.insidehighered.com. Retrieved 9 June 2018.
  23. ↑ "EDMC completes sale of schools to Dream Center". Pittsburgh Post-Gazette. Retrieved 2017-10-21.
  24. 1 2 3 Belser, Ann (2013-02-08). "EDMC's enrollment falls by 16.3 percent". Pittsburgh Post-Gazette. Retrieved 2013-05-20.
  25. ↑ "Robert B. Knutson - Education Management Corp (edmc)". The Wall Street Transcript. 1998-05-18. Retrieved 2016-05-30.
  26. 1 2 3 Modzelewski, Eve (2001-07-11). "Education Management Buys Rival". Pittsburgh Post-Gazette. Retrieved 2013-05-01.
  27. ↑ "Art Institute Provides Professional Training". The Pittsburgh Press. 15 August 1948. Retrieved 22 May 2013.
  28. ↑ Sabatini, Patricia (5 November 2000). "Art Institutes' Parent Firm Meets Here, Sees Growth". Pittsburgh Post-Gazette. Retrieved 24 May 2013.
  29. ↑ McKay, Jim (26 August 2003). "Art Institutes Online adding 53 jobs to Downtown staff". Pittsburgh Post-Gazette. Retrieved 20 May 2013.
  30. ↑ May Reeves (19 May 2003). "Education Management Corp. Pittsburgh, Pennsylvania; Educator Does Its Homework On Hot Trends". Investor's Business Daily. Retrieved 21 May 2013.
  31. ↑ Sorkin, Andrew Ross (2006-03-06). "Education Management Said to Be Sold for $3.4 Billion". The New York Times. ISSN 0362-4331. Retrieved 2016-05-30.
  32. ↑ Snipes, Cameron (17 December 2010). "Chris Mesecar, The Art Institute of Raleigh-Durham". Triangle Business Journal. Retrieved 20 May 2013.
  33. ↑ "Archived copy". Archived from the original on 2016-10-02. Retrieved 2016-09-29.
  34. ↑ "Sgt. Pantzke: "I Just Want To Be Able To Start Over"". FRONTLINE. Retrieved 2016-05-30.
  35. ↑ Conte, Andrew (28 February 2013). "Education Management CEO praises back-to-basics strategy". Pittsburgh Tribune-Review. Retrieved 20 May 2013.
  36. ↑ Education Management Corporation. "John Mazzoni, President of The Art Institutes, Departs July 14, 2013". PR Newswire. Retrieved 2016-05-30.
  37. ↑ Fleisher, Chris. "EDMC schools on federal list for poor financial management". TribLIVE.com. Retrieved 9 June 2018.
  38. ↑ "EDMC to Close 15 Art Institute Locations". Pittsburgh Business Times. 6 May 2015.
  39. ↑ "EDMC to Close 3 More Art Institute Locations". Trib Live. 20 January 2016.
  40. ↑ Fleisher, Chris (2016-05-05). "EDMC layoffs -- mostly in online division -- hit hundreds in Pittsburgh, Phoenix". TribLIVE.com. Retrieved 2016-05-30.
  41. ↑ http://www.bizjournals.com/pittsburgh/news/2016/06/03/art-institutes-coo-resigns.html?ana=twt
  42. ↑ I Am Ai (7 September 2016). "#neiacollective who's the boss". Retrieved 9 June 2018 – via YouTube.
  43. ↑ "Former Art Institute Students Demand Justice At Their Old Campus". Retrieved 9 June 2018.
  44. ↑ "Attorney General Raises Concerns About New England Institute of Art". Retrieved 9 June 2018.
  45. ↑ "For-profit college may sell campuses to company in India". POLITICO. Retrieved 9 June 2018.
  46. ↑ "Accreditor Rejects Sale of 2 Art Institutes - Inside Higher Ed". Retrieved 9 June 2018.
  47. ↑ Olson, Thomas (20 January 2013). "Education Management's profit falls 51%; sale-leaseback of Art Institute studied". Pittsburgh Tribune-Review. Retrieved 20 May 2013.
  48. ↑ Andrew Ross Sorkin (6 March 2006). "Education Management Said to Be Sold for $3.4 Billion". The New York Times. Retrieved 20 May 2013.
  49. ↑ "Accreditation and Licensing -". www.artinstitutes.edu. Retrieved 9 June 2018.
  50. ↑ https://triblive.com/local/allegheny/13996459-74/pittsburgh-art-institute-could-lose-accreditation-by-november
  51. ↑ http://www.bizjournals.com/pittsburgh/news/2015/05/06/edmc-to-close-15-art-institute-locations.html
  52. ↑ "Announced Closures". www.highered.nysed.gov. Retrieved 9 June 2018.
  53. ↑ "Heightened Cash Monitoring | Federal Student Aid". Studentaid.ed.gov. Retrieved 2018-06-09.
  54. ↑ http://phx.corporate-ir.net/phoenix.zhtml?c=87813&p=irol-newsArticle&ID=128987&highlight=<
  55. ↑ https://www.sec.gov/Archives/edgar/data/880059/000095012800001178/j8404401e10-k.txt
  56. ↑ Keller, Josh (August 8, 2011). "Education Management Corp. Improperly Paid Recruiters, Prosecutors Say". The Chronicle of Higher Education. Retrieved November 22, 2011.
  57. ↑ Lewin, Tamar (August 8, 2011). "For-Profit College Group Sued as U.S. Lays Out Wide Fraud". The New York Times. Retrieved October 5, 2011.
  58. ↑ Keller, Josh (November 6, 2011). "A Chain of For-Profit Art Institutes Comes Under Scrutiny". The Chronicle of Higher Education. Retrieved November 22, 2011.
  59. ↑ "EDMC Professors and Students Speak: How Lobbyists and Goldman Sachs Ruined For-Profit Education". Huffington Post. 24 September 2012.
  60. ↑ Cousins, Christopher (2013-06-01). "Judge allows lawsuit against for-profit college firm linked to ex-Gov. McKernan to continue". The Bangor Daily News. Retrieved 2016-05-30.
  61. ↑ Asimov, Nanette (2014-06-17). "SF wins $4.4 million settlement with for-profit art school". SFGate. Retrieved 2016-05-30.
  62. ↑ Renda, Matthew (2016-04-11). "Class Says For-Profit Art School Stiffs Profs". Courthouse News Service. Retrieved 2016-05-30.
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