On December 19, 2016, the U.S. Department of Education (“ED”) announced that following an 18-month review, it had denied Charlotte School of Law (“CSL”) recertification to participate in federal student financial aid programs under Title IV of the Higher Education Act. The denial ended CSL’s participation in the Title IV programs effective December 31, 2016.

In a letter to the President of CSL, a for-profit law school located in Charlotte, North Carolina, ED provided two reasons for the denial:

• The American Bar Association (“ABA”) determined that CSL is, and has been, out of compliance with certain ABA standards, and CSL’s failure to “meet the requirements” of the ABA violated ED’s requirements for continued participation in Title IV programs; and

• ED determined that CSL made substantial misrepresentations regarding the nature of its academic programs in violation of ED’s prohibition on substantial misrepresentation.

First, ED found that on three separate occasions, the ABA determined that CSL was out of compliance with ABA accreditation standards and interpretations of those standards and that the noncompliance was so severe as to warrant placing CSL on probation. The ABA also found that “CSL’s plans for bringing itself into compliance with the Standards ha[d] not proven effective or reliable.” ED concluded that CSL failed to “meet the requirements” established by its accreditor, as required by ED to participate in Title IV programs and that such failure was “of sufficient severity to merit the denial of recertification.” However, ED noted that its denial of CSL’s application for recertification

should not be read to suggest that the Department will reach the same conclusion each time an accreditor finds an institution noncompliant with the accreditor’s standards. As it did in this case, the Department will continue to review, in the context of a recertification application, any finding of noncompliance by an institution’s accreditor in light of the specific facts regarding that finding, other relevant facts regarding the institution under review, and the appropriate statutory and regulatory standards.

Second, ED found that CSL breached its fiduciary duty to ED and demonstrated a lack of administrative capability by substantially misrepresenting the nature of its educational program. Specifically, ED concluded that in violation of ED regulations, CSL substantially misrepresented to students and prospective students the “nature and extent” of CSL’s accreditation and the “appropriateness of its courses and programs to the employment objectives that it states its programs are designed to meet”. Instead, ED found:

• CSL continued to make public statements that CSL had “full accreditation” from the ABA, despite the ABA’s repeated finding that CSL was not in compliance with several standards;

• CSL continued to state that it had a “rigorous” curriculum, despite the ABA’s repeated finding that CSL had not maintained a “rigorous” program of legal education; and

• CSL substantially misrepresented the bar passage rates of CSL graduates in an interview given by the President of CSL to a local publication.

As a result of ED’s decision, beginning January 1, 2017, CSL students may no longer use Title IV aid to attend CSL. CSL had until January 3, 2017 to submit factual evidence to dispute ED’s findings. If CSL submitted evidence that causes ED to reconsider its determination, ED may allow CSL to regain eligibility to participate in Title IV programs.