Why Minnesota wants to shut down Globe University and the Minnesota School of Business

The Minnesota Office of Higher Education wants to shut down Globe University and the Minnesota School of Business. The two schools are owned by the same outfit and have campuses in the Twin Cities, Rochester and St. Cloud, as well as one in South Dakota and some in Wisconsin. The OHE move comes after a Hennepin County District Judge found that the two schools engaged in fraud on students. A Minnesota law says that the state cannot approve any school “if there has been a criminal, civil or administration adjudication of fraud or misrepresentation in Minnesota or another state.”

That’s the short story. The longer story will take months to unfold, including what will happen to the students currently enrolled at the colleges, whether former students who have been defrauded will get money back, and what will happen to thousands of former students who owe student loans because of their time at these institutions.

Minnesota Attorney General Lori Swanson sued the schools in 2014. The basis for the suit: the schools told students their criminal justice programs would lead to careers in law enforcement. That was not true – the programs were not accredited in Minnesota. Students who took out loans and spent years getting through the programs found that their degrees were useless in getting law enforcement jobs. The schools ended the criminal justice program more than a year ago.

The Minnesota Office of Higher Education says they will allow a “teach-out” plan, so that there can be some accommodation for the schools’ current students.

The Globe University website says that they offer “more than 30 accredited university degrees as well as certificate programs,” ranging from certificates to AA, BS, BFA, MBA, MS and Doctor of Business Administration. Enrollment has dropped from 9,200 students in 2010 to about 1,700 now.

A September 12 City Pages article gave these follow-the-money details about the trajectory after Terry Myhre bought the two education businesses in 1972:

“Changes in federal law permitted for-profit schools to access government student loan money, Pell Grants, and GI bill benefits.

“It wasn’t long before Globe was swimming in that cash. Between 2011 and 2012, according to the U.S. Department of Education, the company took in about $170 million in federal student aid. …

“But it wasn’t just taxpayers subsidizing Globe’s mini empire. Students paid the heavy freight. In 2010, 96 percent of its students took out student loans. They enrolled in two-year programs that cost about double that of similar associate’s degrees offered at community colleges.”

ITT Technical Institutes closed down earlier in September. According to the Pioneer Press:

“Federal officials are also considering taking oversight authority from the Accrediting Council for Independent Colleges and Schools, one of the nation’s largest accreditors of for-profit colleges, including Globe University and the Minnesota School of Business.”

For-profit colleges have come under the spotlight since Iowa Senator Tom Harkin blew the whistle on them in 2012. According to a New York Times article on the Harkin report, which was based on a two-year investigation:

“[T]axpayers spent $32 billion in the most recent year on companies that operate for-profit colleges, but the majority of students they enroll leave without a degree, half of those within four months.

“’In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,’ Mr. Harkin, an Iowa Democrat who is chairman of the Senate Health, Education, Labor and Pensions Committee, said in a statement on Sunday. ‘These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.’”