The Art Institute of Pittsburgh is set to close permanently on March 31, a move that affects more than 2,100 students and brings an abrupt end a storied brand of education that, as it grew into a nationwide chain of schools over nearly a century, celebrated careers that blended the creative arts and the skilled trades.
The Strip District school — with courses in animation, graphic design, culinary arts and fashion — has been mired in financial problems amid sinking enrollment and heightened scrutiny from regulators in recent years.
Millions of dollars of debt saddled Dream Center Education Holdings, the Los Angeles-based nonprofit that purchased 31 Art Institute campuses in 2017 from long-time owner Education Management Corp. Dream Center, in court filings this month, projected a $64 million loss in 2019 across all former EDMC schools.
Earlier this month, the Art Institute of Pittsburgh and several other former EDMC campuses were placed in federal receivership. Shortly after, on Jan. 22, Dream Center submitted a closure notice to the U.S. Department of Education.
The news, first reported by the Pittsburgh Post-Gazette on Thursday, came as a shock to many students, faculty and staff, even those who had watched the Pittsburgh campus downsize.
“I wanted to retire here — I did — because it was a great company,” said Dave Majocha, a member of the academic support staff who was laid off last week after 11 years.
When someone texted him about the closure, Mr. Majocha rushed from his Greensburg home on Thursday to collect things from his desk that he had left behind. He described the offices on Penn Avenue as somber and largely empty, as layoffs were gradually carried out over the last year.
Mr. Majocha was among many people who said they had not received any notice from school administration, even though the closure plan said Dream Center would announce the news on Jan. 25.
“I knew some people were getting laid off. I had no idea we were closing. No clue,” he said.
He isn’t sure what he’ll do next, but his main concern is with the students he advised — students who were signing up for online courses while they also took courses in the classroom.
“That’s who you grow attached to,” he said. “The education they get here is awesome, and that’s why we do what we do here. We do it for them. … They suffer the most. We can get jobs, but they have to start over again.”
A long history
The Art Institute of Pittsburgh was founded in a single 500-square-foot room in the Fulton Building on Sixth Street, now home to the Renaissance Pittsburgh Hotel.
In the late-1960s, the school was purchased by EDMC and eventually franchised to other cities across the country under the for-profit education model.
In 2000, as enrollment climbed toward 2,500, the Art Institute of Pittsburgh moved to 420 Blvd. of the Allies, a building with 154,000 square feet and an illuminated lobby that showcased the work of students and alumni. The school’s brilliant red logo became a fixture in the Downtown skyline.
EDMC acquired other nationwide college chains. Through the 1990s and 2000s, the Art Institute grew from eight campuses to 45. By 2009, there were 45 Art Institutes in 22 states and British Columbia, Canada.
But things took a turn for the worse for EDMC and the broader for-profit education industry.
Federal officials accused EDMC of putting profit over the outcomes of its graduates, blaming such schools for ballooning student debt and underemployment.
In 2015, EDMC settled a lawsuit with the U.S. Department of Justice and dozens of attorneys general for $100 million, refunding some students who had been there for a short time and agreeing to disclose more information. It admitted no wrongdoing.
The damage was done to EDMC’s reputation. Enrollment at the Art Institute of Pittsburgh had fallen to 654 students in the fall of 2016 and shrunk to its current total of 230 students, according to the closure plan.
What’s next?
Most of those students will be scrambling to find other schools.
There are currently about 230 students attending classes at the Pittsburgh school, and about 46 are expected to complete courses by March 31, according to the closure plan.
Additionally, there are about 1,924 students nationwide attending Art Institute online courses, which are managed by the Art Institute of Pittsburgh. Only about 286 of those students are expected to complete courses by March 31, the plan stated.
Students who are in the middle of their course of study can transfer to another Art Institute or a “partner institution” that would accept displaced students. The plan does not list what schools may be considered as alternatives.
Students can also apply for a student loan discharge with the U.S. Department of Education or — if the student is a veteran — the U.S. Department of Veterans Affairs, the plan stated.
Dream Center management has not responded to requests for comment since the EDMC deal was announced in March 2017. At that time, Dream Center promised the shift to nonprofit status would help turn around the ailing schools.
“I think the students and faculty and staff will all probably take a deep sigh of relief to be considered a nonprofit university,” Randall Barton, chairman of Dream Center Education Holdings, told the Post-Gazette at the time. EDMC promised that a “cloud will be lifted.”
Yet the organization was almost immediately beset by financial problems.
Dream Center closed 18 Art Institute campuses at the end of last year, about half the Art Institute schools it bought in the 2017 deal. It recently transferred some schools to another nonprofit, Education Principle Foundation.
The Art Institute of Pittsburgh, along with several other campuses, was not part of that transaction. Those were instead placed into federal receivership earlier this month, with Dream Center blaming the EDMC for failing to disclose how much money the schools were losing.
Receivership allows the schools to continue operating while Dream Center works “with new financial partners who will be helping restructure the vast amount of debt and overhead we inherited when we acquired the school systems from EDMC,” reads a Jan. 18 email sent by Dream Center to faculty and staff.
In a court filing, Mr. Barton said the nonprofit faced projected losses of $64 million in 2019 and $69 million in 2020 across all the campuses.
The closure plan must be approved by the U.S. Department of Education and the accreditation agency, Middle States Commission on Higher Education, based in Philadelphia.
A Middle States spokesman said on Wednesday the commission had received an update from the Art Institute of Pittsburgh and was considering it. He declined to comment on the content of the update.
‘What do we do?’
On Thursday, the Art Institute of Pittsburgh building was mostly quiet, with students trickling in and out and taking smoke breaks.
Chris Davis, who said he is the last visual effects major left at the school, is scheduled to graduate by the March 31 closure. He said there had been no communication from the school, so he and his friends tried calling the law firm that recently took control of the school in receivership. No answers.
“It’s one of those things where it’s like, what do we do?” Mr. Davis said.
“My only concern is when I graduate, am I going to get a diploma in hand? That’s my only concern. And also for these guys who aren’t graduating, they’re kind of screwed. It’s tough.”
Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore
Updated at 6:24 p.m. Thursday, Jan. 31, 2019
First Published: January 31, 2019, 4:33 p.m.
