The Art Institutes
[3] Long owned by Education Management Corporation (EDMC), the Art Institutes were sold in 2017 to the Dream Center Foundation, a Los Angeles–based Pentecostal organization.[5] The Art Institutes faced accreditation and legal issues and student loan debtors have appealed to the US Department of Education for debt cancellation through defense to repayment claims.The city claimed AI used deceptive marketing tactics resulting in underestimated program costs for students and inflated job placement figures for graduates.[31] 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.The council will reinstate the license when Dream Center Education Holdings shows that it has "regained financial solvency or completed a viable reorganization.[43] In February 2019, a federal court-appointed receiver halted Dream Center Education Holdings' plans to close the Art Institute of Pittsburgh on March 31, 2019."[49][50] In April 2023, the Supreme Court rejected a challenge to the settlement and allowed to proceed the debt cancellation due to alleged fraud.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.[59] In July 2017, an accrediting agency, Middle States Association, rejected the sale of the Pittsburgh and Philadelphia Art Institutes to the Dream Center Foundation.[61] Inside Higher Ed described Education Principle Foundation as "a Delaware nonprofit with no annual budget and almost no internet presence", and linked it to private equity firm Colbeck Capital Management.[77][78][79][80] 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.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.[73] 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, in order "to reduce compensation and increase its own profits.[33] On July 6, 2017, two former Art Institute students filed a lawsuit against Secretary of Education Betsy DeVos for illegally delaying rules intended to protect borrowers' rights.