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For-profit colleges in Minnesota face new challenges

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In 2011, Minnesota School of Business had 258 students studying at its Lakeville campus — its highest enrollment in the last five years. Now the campus' single building is being cleared out in preparation for sale.

The 36,541-square-foot building is on the market for $4.9 million. 

Outside, the parking lot was mostly empty, save a few cars and a giant blue dumpster.

The Lakeville campus was one of four the Minnesota School of Business announced it was closing in May, and one of six closed in the last two years. 

It's not the only struggling for-profit.

"Le Cordon Bleu is closing. These are just in Minnesota now. Sanford Brown is closing. The Art Institutes International is closing," said Larry Pogemiller, commissioner of the Minnesota Office of Higher Education. "Even the institutions that are surviving here, they are downsizing."

State data show 14 campuses of for-profit schools in the state have closed since 2012.

Enrollment has fallen by almost half at for-profit/career schools since 2010, according to state data. 

Adding to for-profit college woes, the U.S. Department of Education staff recommended in June that the Accrediting Council for Independent Colleges and Schools should no longer be recognized as an accreditor. 

If that happens, 21 Minnesota schools will have a year and a half to find a new accreditor. If a school loses its accreditation, its degrees will not be be recognized by the state.

Two of the for-profits operating in the state, Globe University and Minnesota School of Business, are facing a lawsuit by Minnesota Attorney General Lori Swanson. A judgment in that case is expected soon.

"I think the public has caught onto the failings of these institutions," Swanson said. "People go to these schools to improve their lives and advance their own economic security. But have seen those expectations and those hopes dashed and it's because the schools made promises they can't keep."

Swanson says her office is targeting for-profit institutions that she says don't place students in jobs at the rates advertised or say credits can be transferred when they can't.

Alythia Scully has a degree in massage therapy from the Minnesota School of Business. 

"I'm 21 years old and I've been working in my career for almost three years," Scully said. "I have only $15,000 of debt as compared to people my age going to school. They're in their second or third year at the U. They have no idea what they want to do, they're already $50,000 in debt. I think I'm a little bit better off."

She studied massage therapy for a year and a half at the school's Elk River campus, which is now closed.

She now works at Juut Salonspa. And says the career-oriented school helped her land a job months before graduation.

Globe declined an interview request, but sent responses to several questions by email.

"There is no denying the legal and political attacks against our schools and those like them have been detrimental to public perception," the statement read. "It is unfortunate that the good work and efforts of many — including hundreds of devoted and hard-working employees of Globe and Minnesota School of Business — have been minimized and discredited by the actions of a few."

According to a study from the Office of Higher Education, in 2014, for-profit bachelor degree recipients had a median loan debt of around $48,000. That's compared with about $28,000 for non-profits and around $25,000 for state schools.

Commissioner Pogemiller said his office is keeping a closer watch on for-profit schools, in part because like many other post-secondary institutions, the costs are hitting people harder.

"This is not just going on in the proprietary sector," he said. "This is also going on with non-profits and with public institutions. Because price has risen so much in the last decade or two, I think citizens are just demanding better information and higher quality for the investment they're making."

It was a steep investment for Judy Nelson of St. Francis. She'd spent most of her adult life working as an accountant. That changed in 2008 when she turned 56. 

With her employer agreeing to pay half, Nelson enrolled in a technical writing program with Kaplan University, an online for-profit school. She liked the program, her professors and even the long hours of study she put in. And within seven months of graduation, Nelson had a new job at her company, but also $20,000 in debt.

"It was a very expensive program, even with my employer paying half of it, it was more than I thought it should cost for two years of school," she said. "And when I look back on the increase in my salary since then, I have to say that yes it was worth it."

Correction: The story has been corrected to say degrees from unaccredited schools are not recognized by the state of Minnesota. It previously said schools would not be allowed to award degrees if they lost accreditation.