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DOE decides enough is enough for Infilaw scamsters

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A couple of years ago I wrote a long investigative piece for the Atlantic on how Infilaw, a subsidiary of the Chicago-based private equity outfit Sterling Partners, was exploiting the GRADPLUS federal student loan program via three wildly expensive for-profit law schools: Arizona Summit, Charlotte, and Florida Coastal.

Among other things, the article outlined how Infilaw had, in the face of a steep decline in law school applicants, thrown the schools’ already-low admission standards out the window, and predicted that as a consequence bar passage rates for graduates would collapse, and the already grim job prospects for those graduates would get even more dire.

All this has since come to pass.  Despite employing desperate measures such as paying graduates not to take the bar exam, bar passage rates at all three schools are in free fall.

Now the Department of Education has decided to cut off the spigot:

The Department of Education says it will end federal assistance to the Charlotte student body as of Dec. 31. Much of the money would have come as tuition loans – a devastating loss to a school that has branded itself as a gateway to the legal profession for nontraditional law students.

It’s not clear how many of the for-profit school’s 700 or so students (down from a high of about 1,400) depend on federal aid to meet tuition and expenses estimated at about $60,000 a year. Last year, Charlotte School of Law enrolled about 950 students who received about $48.5 million in federal aid, most of it in student loans. [“Most” means essentially all.  There is currently no limit on how much graduate and professional students can borrow from the feds via GRADPLUS.)

In making the announcement, federal officials accused Charlotte School of Law of being “dishonest” and “misleading” in describing the education it offered and the likelihood of its students becoming lawyers. The American Bar Association, the accrediting agency for law schools, put the school on two year’s probation in October for similar reasons.

“The ABA repeatedly found that 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 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.”

Early reaction from the community followed a similar bent.

“The misrepresentations made by the Charlotte School of Law and … Infilaw are astounding,” said Jonathan Sink, legislative liaison for Mecklenburg County. Sink said the government’s decision to cut off aid to the school was not surprising but remained “a devastating blow to hardworking students and alumni.”

It was not immediately clear just how damaging the loss of money will be. Jay Conison, dean of the school, did not respond to a series of Observer questions Monday afternoon. A school spokeswoman promised a statement later in the day.

As to how damaging this will be, nearly 100% of Charlotte’s income, like that of the other Infilaw schools, comes from tuition dollars, and the overwhelming majority of those dollars are funneled into the school’s coffers in the form of federal student loans. So unless this decision gets reversed (Charlotte has a couple of weeks to file an appeal.  ETA: Of course as a couple of commenters immediately noted, it’s far from clear the Trump administration’s DOE will look on the Infilaw scam with anything but pure admiration) Charlotte will be going out of business almost immediately, which is actually great news for its current victims students, since that means their student loans will be forgiven.
Merry Christmas!
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