by Allen K. Easley
On January 18, 2019, Argosy University and its parent, Dream Center Education Holdings, entered into receivership due to severe financial distress. Western State College of Law, as a campus of Argosy, was dragged into that receivership though it was financially healthy. The title—we refused to quit—is a spoiler that announces we are still here. But the ride was bumpy, and it is not quite over.
At the time we entered into receivership, we were advised that this could provide a pathway to rescuing the law school from Argosy’s insolvency. Despite numerous efforts from our alumni, students, faculty, and staff, from the judge overseeing the receivership, and even the primary secured creditor, nothing about the receivership ever resembled a clear pathway to success. We lost half our staff in one day, and more along the way, as the receiver struggled to cover financial shortfalls across the rest of Argosy.
Meanwhile, our students faced a financial crisis. With the exception of a small number of students whose loans were disbursed pre-receivership, none of our students received their loan disbursements, including the portion designed to help them with living expenses. Because Argosy was on heightened cash monitoring with the Department of Education, we needed to front the disbursements to our students and then get reimbursed from the government. But once the receivership started, there was no money available to front disbursements. Our students suffered financially and emotionally. It was a horrific experience.
We had generous alumni, faculty, and staff doing what they could to help, including setting up a food bank and contributing gift cards for gas or groceries. But gift cards don’t pay the rent. And though alumni were willing to donate more, larger donations to Western State could not help because every dollar coming into Western State went directly into the receivership.
And then the Department of Education discovered that loans that were supposed to have been disbursed to Argosy students never reached them. To be clear, every dime that Western State said it disbursed to students was actually disbursed to students. But because we were a campus of Argosy, the punishment visited on Argosy for someone’s mishandling of funds impacted us, too. We were barred from the federal loan program. And the reimbursement we should have received for the money we actually disbursed to students never reached us. All hope for our students getting further loan disbursements vanished.
Then the receiver announced in early March that Argosy was closing immediately, mid-semester. But the receivership court, the receiver, and the primary secured creditor worked out a plan with Western State to keep us open a month longer, so that by accelerating instruction we could get our final semester students graduated. And that plan transformed into a plan to keep us open for the entire spring semester so that all of our students could complete the semester. We managed this feat, even with critical staff dismissed, thanks to the substantial efforts of remaining staff, faculty, administrators, and alumni volunteers.
During this period, several suitors expressed interest in purchasing Western State, but the one that stayed the course, overcoming monumental obstacles along the way, was Westcliff University, an Irvine-based university, accredited by the Western Association of Schools and Colleges, Senior College and University Commission (WSCUC), offering undergraduate and graduate degrees in business, IT, and education.
To get Western State to a position where it could regain access to federal loan programs and begin recruiting new students, the acquisition of Western State by Westcliff had to be approved, not only by the receivership court and the Department of Education, but also by our accreditors, WSCUC, and the ABA. That would take too much time to help our current students fund their studies with us this fall.
The solution to this dilemma demonstrates the commitment Westcliff made to Western State and to our students. Westcliff agreed to fund a “teach out” of our current students, while simultaneously seeking accreditor approval of the acquisition of Western State. Teach outs can be approved more quickly because neither the federal government nor accrediting agencies want to create obstacles to a genuine effort to assist current students in completing their program of study. Westcliff committed to fund this teach out, whether or not it obtains accreditor approval of the acquisition needed to begin recruiting new students.
So, this fall we are welcoming back approximately 230 continuing students. We will appear before the ABA in November seeking approval of the acquisition. If that approval is obtained, we can begin recruiting new students for the fall 2020 term.
It has often been said that Western State students are tenacious and scrappy. They understand that the road to success is paved with hard work. That is as true today as it was fifty years ago when Western State first opened its doors. You can see it in the successes of so many of our alumni across Orange County. You can see it on the Orange County bench, which includes more Western State graduates than from any other law school anywhere. You could see it in the perseverance of our students last spring. And in our faculty and our staff, who kept working hard to hold everything together against all odds. I think the resilience of our students is what produces such great lawyers. So here is hoping for many more to come.
Allen K. Easley is Dean of Western State College of Law at Westcliff University. He can be reached at email@example.com.