Feds, Charlotte School of Law fail to reach agreement over federal student loans

Less than a week before the resumption of classes, the reeling Charlotte School of Law appeared dragged into deeper chaos Wednesday with the federal government’s announcement that negotiations with the school over the return of millions of dollars in student loans have broken down.

In a statement sent to Charlotte School of Law’s students Wednesday, a top U.S. Department of Education official said his agency and the law school had reached an agreement in principle that would have freed up some of the federal loan money in time for the planned start of classes Monday.

Instead, Charlotte School of Law “has since rejected what it had previously accepted and has informed the Department that it will not be accepting the conditions set,” Under Secretary of Education Ted Mitchell said.

Assuming that the Charlotte School of Law reopens, Mitchell’s announcement means the 10-year-old institution – and its estimated 700 students – must press on without the DOE’s taxpayer-backed loans. Last year, those loans totaled almost $50 million for CSL students.

For weeks, school President Chidi Ogene and Dean Jay Conison have been promising students details of alternative loan options to cover tuition and other expenses. Those details still had not been released Wednesday evening. Nor has the schedule of classes for the upcoming semester, students said.

On Wednesday, Conison and school spokeswoman Victoria Taylor did not immediately respond to a series of Observer questions about the school’s status, including rumors this week that the faculty had been warned of potentially significant layoffs due to the financial crisis.

In a Jan. 10 statement, school leaders said they were “close to completing” an agreement with the DOE that would restore some of the withheld federal money. Tuition and fees at the for-profit school run about $45,000 a year.

Now, with fewer than five days before the school reopens, students say they don’t know what their courses will be, who will teach them or how they’ll pay the costs.

“I continue to be irate,” said Margaret Kocaj of Charlotte, a third-year Charlotte School of Law student who needs only 10 credit hours to graduate. “It’s exhausting being this mad for this long and finding things out after the fact. We’re not being told anything.”

The administration continues to assure students that it is working in their behalf, she said. “You just threw away the money we need. How is that working in our behalf?”

In November, students learned that their school had been placed on probation by the American Bar Association for problems with its admissions policy and curriculum, along with the lowest bar exam passage rate in the state. The bar association and government regulators accused Ogene and Conison of intentionally hiding the school’s chronic failings from current and future students.

In December, less than a month before classes were to resume, the Department of Education made CSL the first accredited law school ever to lose access to federal student loans. Students rely on money from the department’s Title IV program for tuition, fees and living expenses.

Now a return of the money seems highly unlikely. One of the major sticking points was the so-called “teach-out” plan in which CSL would partner with another school so its current students could complete their educations. Under the plan, Charlotte School of Law would close for good in the spring.

In his statement, Mitchell said the government insisted that all further instruction of Charlotte School of Law students had to be conducted “only by a teach-out partner.” In CSL’s case, that would have been Florida Coastal School of Law, one of the Charlotte school’s sister institutions in the InfiLaw for-profit chain.

In addition, Mitchell said any new loans had to be handled in a way “that does not create risk to taxpayers.” In punishing the school last year, both the bar association and the Department of Education said the school’s admissions, curriculum and scores on the bar exam make it unlikely that Charlotte School of Law students would land the legal jobs and salaries necessary to repay six-figure debts, leaving taxpayers to cover the tab.

With an agreement now off the table, Mitchell said, the Charlotte students also don’t qualify for the full and partial tuition refunds available to those who attend a closed school.

The government agency pressed the school “to be fully transparent about student options under the agreement,” Mitchell said. But education officials grew frustrated with delays by the school that now leave its students with few if any options, a department spokesman said.

Charlotte attorney R. Lee Robertson Jr., president of the Charlotte School of Law Alumni Association, said Wednesday that the association is “gravely concerned for the future of our law school and its students.” The association “calls on the leadership of the law school and InfiLaw to take steps to immediately ensure that our students are able to complete their legal education in Charlotte – whatever the cost.”

In their update to students last week, school leaders said they were continuing to work with the bar association and state officials on a teach-out plan.

Kocaj said she has run out of patience.

“School is supposed to start Monday,” she said. “How can anyone be prepared?”

This story was originally published January 18, 2017 at 7:53 PM with the headline "Feds, Charlotte School of Law fail to reach agreement over federal student loans."