As Art Institutes and Argosy University enter receivership, what’s next?

Dream Center Education Holdings, which operates Orange County’s first law school as well as several Argosy University and Art Institute campuses in Southern California, has been placed in federal receivership as options are sought to get out of millions of dollars of debt.

The move led an accreditation agency to put the college system on notice earlier this month, as students wonder whether they will need to find new campuses to transfer to.

Dream Center Education Holdings said in court documents it owed $41 million as of late December, due to a substantial deficit from a decline in enrollment and higher-than-expected expenses.  Dream Center said in its court filing it wasn’t aware of the deficit until weeks after it bought the schools from Education Management Corporation in 2017.

The Western Association of Schools and Colleges Senior College and University Commission informed Argosy University on Jan. 19 – the day after the Dream Center organization was place in receivership – that the institution may lose its accreditation unless it shows within a year that it has the money to operate.

The campuses can continue to accept new students, but if they were to lose accreditation in the future, the schools would be required to help the enrolled students finish their education, whether at their campuses or elsewhere, the commission’s president, Jamienne S. Studley, said.

Orange County’s first law school, the 53-year-old Western State College of Law, is a part of Argosy University, however officials are confident the campus will remain open.

“The College of Law is one of the most valuable assets,” said Robert Glickman, the attorney representing the receivership. “We are confident we will find a transaction partner that will keep the school open.”

Other officials from Dream Center and its campuses, including the law school, could not be reached for comment.

Nearly 20 Art Institutes campuses, including in Santa Ana and San Bernardino, halted enrollment in July. Dream Center’s website now redirects visitors to a page that shows how the students at those campuses can transfer.

A Delaware nonprofit, the Education Principle Foundation, recently bought some Art Institute campuses across the nation, but none in California. Argosy University campuses in Santa Ana and Los Angeles and an Art Institute campus in Hollywood continue to hold classes, according to the websites.

Glickman said it’s too early to speculate what will happen to the remaining campuses, outside of the law school. But he said the goal of the receiver is to keep those schools open, likely by selling them to a willing buyer.

The money from any purchases would go toward paying back the debt, he said.