The office of Federal Student Aid in the U.S. Department of Education notified Florida Coastal School of Law on May 13 that the school’s application for reinstatement to participate in federal student aid programs is denied.
Without access to federal student aid programs, the law school will close.
“We are currently reviewing the letter with counsel and looking at our options. We have been given 10 days to appeal the DOE decision. We submitted a teach-out plan to the ABA last week and have been in preliminary contact with them concerning this denial and we will be speaking with them further,” said Florida Coastal President and Dean Peter Goplerud in an email.
Details of the teach-out plan will be considered by the American Bar Association’s Council of the Section of Legal Education and Admissions at its meeting May 13-15.
In a news release, the Department of Education said the reinstatement application was denied for three reasons: failure of the financial responsibility standards; failure to meet the fiduciary standard of conduct; and failure to meet the standards of participation, including the standards of administrative capability.
“Too often, we see for-profit schools that try to take advantage of students, misuse taxpayer dollars, and skirt the rules to participate in federal student aid programs,” said U.S. Secretary of Education Miguel Cardona in the release.
“Today we want to be heard and understood by for-profit schools around the country: we will be vigilant in ensuring they meet their commitments to students, families, and taxpayers.”
The release also states:
• The federal Higher Education Act requires institutions to meet general standards of financial responsibility to participate in the federal student financial aid programs.
Florida Coastal School of Law failed to meet the standards because its financial composite score for the past two fiscal years was -1.0, the lowest possible score.
• The institution carried significant debt due to a declining student population and issues surrounding the closure of two other schools that also were under the same ownership: Charlotte School of Law in Charlotte, North Carolina, and Arizona Summit Law School in Phoenix.
• Additionally, the audited financial statements for Florida Coastal School of Law contain a disclosure that raises substantial doubt about its ability to continue operations.
• FSA therefore determined that the institution failed the financial responsibility standards set by federal law.
Troubled consortium
This is the latest action in the past 17 years since Florida Coastal became part of the InfiLaw consortium of for-profit law schools.
Sterling Capital, based in Naples, Florida, purchased Florida Coastal in 2004 and at the same time established the InfiLaw System.
InfiLaw founded the Phoenix School of Law (renamed Arizona Summit School of Law) later in 2004 and the Charlotte School of Law in 2006.
All three schools had issues with the ABA and Department of Education related to admission standards, below average Bar exam passage rates and high levels of student debt combined with below average employment in the Bar percentages and income levels after graduation.
The ABA notified Arizona Summit in March 2016 that the school was on probation for violating ABA academic and admission standards. The school began a teach-out plan when its accreditation was withdrawn in July 2018. It closed in May 2020.
In November 2016, the ABA placed Charlotte School of Law on probation for violating admissions standards required for accreditation. The Department of Education terminated it from the Federal Student Loan program a month later.
Charlotte School of Law closed in August 2017.
ABA scrutiny
At Florida Coastal, the scrutiny by the ABA began in February 2017 when only 25% of the school’s graduates passed the Florida Bar exam.
The national law school accreditation authority conducted a 27-month investigation into whether Florida Coastal was meeting accreditation standards for admission requirements and curriculum.
The ABA eventually declared that Florida Coastal School of Law would remain an approved law school, but then questioned the school’s financial stability.
That investigation ended in February 2020 when the ABA found the school in compliance with standards that ensure that law schools are financially sound, a requirement for accreditation.
According to the Florida Board of Bar Examiners, 68.4% of Florida Coastal graduates who took the Bar exam for the first time in February passed, compared with the state average of 62.4%.