Effective December 31, 2016, the Minnesota School of Business and Globe University will no longer be able to participate in Title IV of the federal student loan program. The U.S. Department of Education made the decision to drop the school from the program last week after misconduct in recent years. The Minnesota School of Business and Globe University is a for-profit college that was found guilty in September of 2014 of fraud by a district court. The state claimed that MSB and Globe University were inflating their job placement rates and offering credits that would not transfer to other universities – thereby deceiving their students. One example is that the criminal justice program offered by these schools was not accepted by the Minnesota police department without additional accreditation not offered by the university.

As a result, some students were left with tens of thousands of dollars of debt, with no opportunities to work in the fields they desired. This was especially problematic for the students because MSB and Globe brand themselves as schools specifically designed to help train students for future careers. At the time the lawsuit was filed in 2014, Minnesota Attorney General Lori Swanson said, “Going to college has long been a way for people to try to make a better life for themselves. The schools exploited this dream for some students, who are now saddled with high levels of student debt.” Swanson had several more engagements with these schools in the years since. The ruling states that effective December 31, 2016, students at the Minnesota School of Business and Globe University will no longer be able to use federal aid part of Title IV, like Pell Grants or Direct Loans.

Last Tuesday, the U.S. Department of Education posted a notice notifying the schools that their requests for recertification in the Title IV federal aid programs had been denied. Essentially, the notice said that the Department of Education had issued letters on December 6, 2016, to Globe and MSB letting them know that they were being removed from the program due to a judgement of fraud against them. The Department of Education also indicated that the misrepresentation of the criminal justice programs at MSB and Globe, as well as a misrepresentation of students’ ability to transfer credits to other schools, led to this decision.

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The Minnesota School of Business and Globe University have until December 20, 2016 to provide the Department of Education with sufficient evidence against these claims. Their recertification in the federal program might be allowed if that evidence causes the Department of Education to change its findings. In a statement, the U.S. Undersecretary of Education Ted Mitchell said: “Globe and MSB preyed upon potential public servants – targeting those with a sincere desire to help their communities. 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.” He continued, “This is a sober reminder that not all institutions deliver on their advertised promises.”

The Minnesota School of Business and Globe University said that they were complying fully with the law after the trial. They also said that they had made changes to the curriculum; most notably, that they were no longer offering the criminal justice program in question. That said, it seems unlikely that the ruling will be reversed. After the investigation was launched a couple years ago, enrollment in the Minnesota School of Business and Globe University dropped significantly and several campuses were closed. The full implications of this most recent decision remain to be seen.