A for-profit vocational college in Northern Virginia abruptly shut down this week amid allegations by federal officials of financial mismanagement and withholding federal financial aid money meant for students.
Students and teachers arrived at ACT College’s campuses in Arlington, Alexandria, and Manassas this week to find classes canceled.
A letter on the locked door of the Arlington campus, dated April 3 and signed by President Jeffrey S. Moore, said the school was forced to close after nearly three decades because the U.S. Education Department rejected its reapplication to participate in federal financial assistance programs.
“We sincerely regret having to close our doors,” the letter said.
The school’s application to renew eligibility for federal aid was denied “to protect students and taxpayer funds,” said U.S. Education Department spokesman Daren Briscoe.
The closure left hundreds of students in limbo, some just weeks from graduation.
Sean Doheney, a 29-year-old Army Reservist seven weeks from graduating, said he took out $30,000 in federal loans to pay for a degree in radiography at the college’s Manassas campus.
He joined dozens of students at a protest in front of the Manassas campus Wednesday to call for an explanation from Moore, who has kept a low profile in recent days and could not be reached Thursday to comment for this article.
“He needs to come out of hiding and answer our questions,” Doheney said. “If he is really responsible for this, or he knew what was going on and did nothing about it, then there needs to be some sort of repercussions.”
ACT College had more than 300 students in programs such as pharmacy tech and medical assisting. Tuition ranged from about $10,000 for a medical office administration diploma program to $28,000 for a medical radiography associates degree, according to a former college executive who asked not to be named because of the sensitivity of the issue.
Federal student aid money made up nearly 90 percent of the college’s revenue, he said.
A March 9 letter from the U.S. Department of Education to Moore detailed allegations of flagrant violations of federal regulations and “fatally deficient administrative capability” at the school.
ACT College routinely withheld federal financial aid dollars meant for students and then falsified records to cover the truth, the Education Department alleged.
Colleges typically are required to pay a student or parent directly for any loan money left over after covering tuition or other authorized fees.
As of June 30, 2011, the letter said, the college owed students a total of $262,382.
“The Department has no basis for confidence that ACT would not have simply converted all of these student funds permanently to its own use, had it not been caught,” the letter said.
Doheney said that over the past two semesters, the college failed to give him more than $5,500 in federal aid that he was due.
The federal government in recent years has stepped up oversight of the rapidly growing for-profit higher-education industry with increased scrutiny of graduation trends — which tend to be lower than at public colleges — and student debt loads. Among those scrutinized for-profit institutions is Kaplan Inc., which is owned by The Washington Post Co.
The portion of ACT College students who default on their student loans within two years is about 15 percent, according to an analysis by the Chronicle of Higher Education. That matches the average for graduates of for-profit institutions, but it is higher than the rate for graduates of all colleges, which is about 9 percent, according to federal data.
Checks from the government stopped arriving earlier this year, the former executive said, which quickly put the school in financial straits. “We were in debt for rent and for everything,” he said.
The former executive denied any allegations of theft, and said that the school was being unfairly targeted.
“The Department of Education basically wanted the school out of business no matter what,” the official said.
The school was accredited through the Accrediting Bureau of Health Education Schools. According to state education officials, that organization is now working to forge agreements with other schools, which would allow ACT students to finish their degrees and diplomas elsewhere. It’s not clear whether students can have any of their loans forgiven.
The U.S. Department of Education and the State Council of Higher Education for Virginia are helping to identify schools that might take former ACT students.
“We probably are not going to be able to help some of these students as quickly as we would like to be able to,” said Kirsten Nelson of the state council. “Obviously, this was not expected, and when something like this happens it takes some time.”
Staff writer Lyndsey Layton contributed to this report.