UPDATE: May 29, 2019: A federal judge dismissed a lawsuit against the now-shuttered Mount Ida College, in Massachusetts, brought by a group of former and prospective students alleging, among other claims, that the college failed to disclose its financial condition and violated students' privacy by arranging their transfer to another college. The judge said the claims did not stand up to Massachusetts law, including that "[m]erely paying tuition in exchange for an education does not create a contract" and that a college does not have a fiduciary duty to its students.
Dive Brief:
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In November, two former students and one former prospective enrollee at Mount Ida filed a class-action lawsuit against the college alleging officials knew as early as 2014 that it faced possible financial insolvency and didn't inform students of the situation, according to court filings.
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The lawsuit also claims officials misrepresented the intent of a failed merger with nearby Lasell College as a way to strengthen both institutions, rather than to prevent Mount Ida from closing, and that Mount Ida gave sensitive student information to the University of Massachusetts System as part of a land sale.
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The lawsuit claims the students lost credits, access to degrees and financial aid as a result of the college's "sudden" closure earlier this year, which they say left them with little time to "meaningfully consider" where to transfer.
Dive Insight:
Mount Ida officials said in a statement in November that the allegations in the lawsuit are "meritless" and are based on "incorrect information published erroneously in old media stories and statements twisted out of context."
In a statement announcing the plans to merge with Lasell, which is no longer available online but was quoted by Inside Higher Ed in February, leaders of the two institutions said "the goal of the union would be to create a more robust learning experience" that would capitalize on the "distinctiveness of the programs, curricula and experiences of each institution." They also said sharing resources and committing to keeping tuition costs down would help students from all financial backgrounds get a college degree.
Yet the merger's announcement, which came on a Sunday morning and included little information concerning the change, drew criticism and raised red flags, Inside Higher Ed reported.
A few weeks after the Lasell merger fell through, Mount Ida announced plans to close and that its campus would be sold to the University of Massachusetts Amherst while its students were offered automatic enrollment at UMass Dartmouth as well as help transferring to the system's Boston, Lowell and Amherst campuses. The acquisition was announced in early April and the college officially closed in mid-May.
The Boston Globe reported Mount Ida didn't do its due diligence around the closure, including informing the state higher education department as well as developing a plan for students to finish their degrees. There are also questions over why Mount Ida rejected Lasell's deal, which had been modified due to Mount Ida's debt levels, according to the Globe. State lawmakers probing Mount Ida's closure cited "gaps in oversight" and a "major lack of communication" at "every phase of its decline," according to the Telegram & Gazette.
"We had a perfect storm of failures," Carmin Reiss, who was the chair of Mount Ida's board, said during a state Senate committee hearing. "Did we go out and announce, 'Hello interested students: We're teetering on the brink of insolvency. But come on in.' We didn't do that. We believed we had a plan." Reiss is named in the lawsuit and those comments are cited.
In dismissing the lawsuit, the federal judge responded to allegations the Mount Ida officials intentionally withheld information about its financial condition by noting the college's audited financial statements were publicly available and indicated a running deficit.
Mount Ida is one of more than a dozen small, private colleges to close in since 2016, according to a count kept by Education Dive.
A Moody's Investor Service analysis published in July forecasts that small college closures will continue to climb, with 15 per year in 2019 or 2020 as workforce needs become more prominent and students and their families become more sensitive to college costs.
In a March report, S&P Global suggests closures and consolidation will be most likely in the Northeast and Midwest and that small private colleges will be "prime candidates." Those trends have prompted Massachusetts to step up oversight of those institutions.