ED Yanks Federal Title IV Eligibility From Two Minnesota For-Profit Colleges

By Allie Bidwell, Communications Staff

The Department of Education (ED) on Tuesday dropped Globe University and Minnesota School of Business (MSB) – two for-profit colleges under the same ownership – from participating in federal student aid programs. Participation in federal student aid programs will end at the end of this month for all locations of the two institutions, ED officials said.

ED said that the two institutions were ineligible to participate in federal student aid programs because they had been “judicially determined to have committed fraud involving Title IV program funds.” Globe and MSB also “knowingly misrepresented” their criminal justice programs to students and misled them about the transferability of credits to other institutions, leaving many students with substantial amounts of debt and limited opportunities for employment within their career paths, ED said.

Beginning Dec. 31, 2016, students will no longer be able to use Pell Grants or federal student loans to pay for their studies at either institution. ED sent letters to Globe and MSB on Tuesday, notifying them that their applications for recertification to participate in Title IV student aid programs had been denied.

“Globe and MSB preyed upon potential public servants – targeting those with a sincere desire to help their communities,” said Under Secretary of Education Ted Mitchell, in a statement. “These institutions misrepresented their programs, potentially misleading students, and abused taxpayer funds, and so violated federal law, which is why we removed them from the federal student aid program. This is a sober reminder that not all institutions deliver on their advertised promises.”

Earlier this year, in September, the two institutions had their license to operate revoked by the Minnesota Office of Higher Education. That decision came after a state court ruled that the institutions had violated the Consumer Fraud Act and the Deceptive Trade Practices Act. Minnesota Attorney General Lori Swanson originally filed the lawsuit in 2014, arguing that the schools used high-pressure recruitment tactics to enroll students in questionable programs.

While neither Globe nor MSB has announced whether it will shut down operations across their locations, other for-profit institution that have been similarly sanctioned by ED – such as Corinthian Colleges, Marinello Schools of Beauty, and ITT Technical Institutes – closed their doors shortly after the federal action was taken.

Together, the two institutions enroll about 1,700 students across 19 locations in Minnesota, Wisconsin, and South Dakota – 10 under Globe and nine under MSB. During the 2014-15 award year, Globe received $28.4 million in federal student aid, and MSB received $25.5 million. The institutions have until Dec. 20, 2016 – two weeks from Tuesday – to submit an appeal disputing ED’s decision.

 

Publication Date: 12/7/2016


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