Media Release: AI Seattle to Close
Art Institute of Seattle to close Friday March 8
March 6, 2019
Updated 5:05 p.m. 3/6/19 to include student enrollment and length of operation.
Olympia—This afternoon, the Art Institute of Seattle (AI Seattle) informed the Washington Student Achievement Council (WSAC) that it will close abruptly—two weeks before the end of the winter quarter—on Friday March 8. About 650 students are currently enrolled at the Art Institute, which has been educating students in Seattle since 1946.
“We strongly disagree with the decision to close before this quarter is over,” says WSAC Deputy Director Don Bennett, who said the decision was “deeply troubling and disappointing.” “It’s incredibly frustrating and distressing to students and it completely disrupts their education.”
A disruptive closure heightens the need for WSAC’s two information fairs on March 12 and 13, which will take place as scheduled. About 30 colleges and universities plan to participate. These schools will have information about transferring credits, graduation requirements, and teach-out options.
- Transferring credits: To help AI Seattle students get credit for their coursework, many of these schools have already evaluated AI Seattle courses to determine if and how the courses could transfer.
- Graduation requirements: To help AI Seattle students graduate as quickly as possible, some schools plan to waive requirements for the number of credits that must be completed at the new school.
- Teach-Out: To help AI Seattle students who want to finish their current program, some schools are attempting to develop teach-out programs.
Find more information about these fairs and other student resources on WSAC’s website.
Other groups and entities may hold transfer fairs at AI Seattle in the coming days. These events are not affiliated with the Washington Student Achievement Council.
On January 10, WSAC changed AI Seattle’s status to at risk of closure, upon learning that the school’s ownership was changing. Dream Center Education Holdings (DCEH) intended to sell its South University, Art Institute, and Argosy University schools. AI Seattle informed WSAC of this after the current winter quarter had already begun. Also at this time, AI Seattle provided WSAC with students’ contact and enrollment information.
The buyer acquiring DCEH’s schools was Studio Enterprise Manager, LLC (Studio) and a foundation connected to Studio, the Education Principle Foundation (EP Foundation). Studio is a Delaware for-profit entity. However, Studio and EP Foundation ultimately decided not to acquire all of DCEH’s schools. AI Seattle was one of the schools not included in the transaction along with AI Pittsburgh and Las Vegas as well as the Argosy University schools.*
On January 19, a federal district court in Ohio appointed a receiver—Mark Dottore—for AI Seattle and the other DCEH schools not included in the transaction with Studio and EP Foundation. Digital Media Solutions, a company that DCEH owed money to, initiated the receivership action. The receiver is responsible for meeting these schools’ financial obligations.
The receiver alleged that assets of schools not included in the sale had still transitioned to Studio. The receiver filed a lawsuit on February 21, 2019 to rescind that deal, then quickly reached a settlement to obtain funds and keep the remaining DCEH schools—including AI Seattle—operating.
Also on February 21, the U.S. Department of Education disclosed that AI Seattle’s receiver—Mark Dottore, who is responsible for AI Seattle’s financial obligations—had limited funds and may not be able to meet the school’s financial obligations for the remainder of the current term.
On February 27, 2019, the U.S. Department of Education denied Argosy University any further Title IV funding (student aid, including loans). The receiver asserts that this left the schools with no money to pay expenses and continue operations.
The receiver’s March 4, 2019 report to the court paints a picture of the financial and operational dependencies across all DCEH schools. The concluding section of that report outlines the following recent actions (excerpt, emphasis added):
- The Receiver entered into terse negotiations with Studio and EP Foundation, sued them and settled with them in under two weeks. Key to the settlement is that Studio and EP Foundation will return any assets acquired from the Excluded Campuses, allowing the Receiver to sell or transition those institutions.
- The Receiver has actively pursued discussions with 15 different potential purchasers, six for Argosy and nine for the Excluded Campuses [includes AI Seattle].
- The Receiver has not paid landlords, and many of the landlords are seeking relief from the stay as imposed in the Receiver Order.
- Acting under the Receiver Order, the Receiver has also stayed over 60 lawsuits against the Receivership Entities, thus reducing legal costs.
- The Receiver is also trying to transition the students who are stranded by the financial dysfunction of the Receivership Entities.
*The complete list of schools under the control of the receiver include:
South University of Ohio LLC, Dream Center Education Holdings LLC, The DC Art Institute of Raleigh-Durham LLC, The DC Art Institute of Charlotte LLC, DC Art Institute of Charleston LLC, DC Art Institute of Washington LLC, The Art Institute of Tennessee - Nashville LLC, AiTN Restaurant LLC, The Art Institute of Colorado LLC, DC Art Institute of Phoenix LLC, The Art Institute of Portland LLC, The Art Institute of Seattle LLC, The Art Institute of Pittsburgh, DC LLC, The Art Institute of Philadelphia, DC, LLC, DC Art Institute of Fort Lauderdale LLC, The Illinois Institute of Art LLC, The Art Institute of Michigan LLC, The Illinois Institute of Art at Schaumberg LLC, DC Art Institute of Phoenix, LLC and its direct subsidiaries the Art Institute of Las Vegas LLC, the Art Institute of Indianapolis, LLC, and AiIN Restaurant LLC; Dream Center Argosy University of California LLC and its direct subsidiaries, and Argosy Education Group LLC; Dream Center Education Management LLC; and, South University of Michigan LLC.
About the Washington Student Achievement Council (WSAC)
The Washington Student Achievement Council is committed to increasing educational opportunities and attainment in Washington.