A College Chain Crumbles, and Millions in Student Loan Cash Disappears

By Stacy Cowley and Erica L. Green
March 7, 2019

When the Education Department approved a proposal by Dream Center, a Christian nonprofit with no experience in higher education, to buy a troubled chain of for-profit colleges, skeptics warned that the charity was unlikely to pull off the turnaround it promised.

What they didn’t foresee was just how quickly and catastrophically it would fail.

Barely a year after the takeover, dozens of Dream Center campuses are nearly out of money and may close as soon as Friday. More than a dozen others have been sold in the hope they can survive.

The affected schools — Argosy University, South University and the Art Institutes — have about 26,000 students in programs spanning associate degrees in dental hygiene and doctoral programs in law and psychology. Fourteen campuses, mostly Art Institute locations, have a new owner after a hastily arranged transfer involving private equity executives. More than 40 others are under the control of a court-appointed receiver who has accused school officials of trying to keep the doors open by taking millions of dollars earmarked for students.

The problems, arising amid the Trump administration’s broad efforts to deregulate the for-profit college industry, began almost immediately after Dream Center acquired the schools in 2017. The charity, started 25 years ago and affiliated with a Pentecostal megachurch in Los Angeles, has a nationwide network of outreach programs for problems like homelessness and domestic violence and said it planned to use the schools to fund its expansion.

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