The U.S. Department of Education announced that Globe University and the Minnesota School of Business (MSB) will no longer be able to participate in the federal student aid program.
In its announcement Tuesday, the department said students at both schools, which share the same owner, will no longer be able to receive Direct Student Loans, Pell Grants and other student aid for veterans effective Dec. 31.
In losing access to federal student loans and other forms of aid, the schools could face devastating financial hardship because many students rely on these programs to pay for college.
The decision was based on Minnesota Attorney General Lori Swanson’s lawsuit against the school, where a Hennepin County District Judge ruled that the school had committed consumer fraud.
U.S. Under Secretary of Education Ted Mitchell said in a statement Tuesday that Globe and MSB had “preyed upon” future public servants who were enrolled in its criminal justice program. In 2014, the schools discontinued the program in the wake of growing complaints that the degree failed to meet requirements allowing graduates to become police and probation officers in Minnesota.
“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,” Mitchell said. “This is a sober reminder that not all institutions deliver on their advertised promises.”
Immediately after the court’s ruling in September, the Minnesota Office of Higher Education began the process of revoking the schools' ability to operate. State laws prohibit schools from operating if they are found to have committed fraud.
The schools have also been unable to enroll new students in Minnesota.
A similar decision led to the closure of ITT Technical Institute, which shuttered all 130 of its U.S. campuses this summer, affecting more than 40,000 students.
Jeff Myhre, Globe’s Chief Communications Officer, defended the schools in a statement Tuesday and said actions by the Obama administration and the Minnesota Attorney General's office have had a destructive effect on "career-focused institutions" like as Globe and MSB.
“It’s unfortunate that the Attorney General and the Department of Education decided to sanction the schools in their entirety,” Myhre said. “Instead of helping students in one program, their actions will eliminate options and tarnish the degrees of thousands of graduates.”
Myhres added the schools are continuing a “teach-out” plan to allow students in Minnesota to finish their degrees or transfer to another institution.
Globe and MSB enrolled roughly 1,700 students in Minnesota, Wisconsin and South Dakota in 2015.
The schools received just shy of $54 million in federal student aid during the 2014-2015 school year, according to federal data.
Globe and MSB have until Dec. 20 to challenge the Department of Education's decision.