Charlotte Law loses access to federal loans which could force closure

The U.S. Department of Education will not provide federal financial aid to students at Charlotte School of Law after January 1, an unprecedented move that could force the school to shut down if it is unable to reverse the decision.

“This action furthers the Department’s commitment to vigorously protect students, safeguard taxpayer dollars, and increase institutional accountability among postsecondary institutions,” the Department of Education announced in a statement.

Charlotte, a for-profit school that is part of the InfiLaw System, received $48.5 million in federal student aid funds, primarily federal student loans in 2015-2016. 

Marinello Schools of Beauty and Medtech College each received a similar denial of federal funds and both closed campuses within days.

The Department of Education (DOE) said the school enrolled 946 federal aid recipients in 2015-2016. Data from the American Bar Association shows the school had 918 J.D. students last year. It also offers an L.LM. degree. This year, Charlotte Law has 712 J.D. students.

The DOE cited Charlotte’s non-compliance with the standards set by the American Bar Association, which placed the school on probation last month.

It also concluded that Charlotte made “substantial misrepresentations to current and prospective students regarding the nature and extent of its accreditation and the likelihood that its graduates would pass the bar exam.”

“The ABA repeatedly found that the Charlotte School of Law does not prepare students for participation in the legal profession. Yet CSL continuously misrepresented itself to current and prospective students as hitting the mark," said U.S. Under Secretary of Education Ted Mitchell. “CSL’s actions were misleading and dishonest. We can no longer allow them continued access to federal student aid.”

Charlotte School of Law disagreed with the assessment.

"We strongly disagree with this determination and are evaluating all available options to challenge the decision, particularly the Department of Education’s mischaracterization of Charlotte Law’s academic accreditation from the American Bar Association and our representation of that status," Charlotte School of Law said in a statement. 

The DOE says the ABA informed Charlotte of its non-compliance in February 2016, and in July 2016. On both occasions, the school failed to disclose the findings to current and prospective students. It is unclear, however, whether the ABA required such disclosure.

"Charlotte Law will continue to work closely with the ABA to seek clarification on this unprecedented decision and we will preserve all avenues of appeal and recourse available to us," the school said. "We will continue to put the best interests of our students first and foremost as we assess our options going forward."

The ABA has said the school has admitted applicants who do not appear capable of satisfactorily completing its program of legal education and being admitted to the bar.

Charlotte has struggled with its median LSAT the past five years. It reported a median LSAT of 151 in 2009. Five years later, those scores had fallen to 142. It increased to 144 this year. Only 11 law schools have reported median LSAT scores of 144 or lower in the past five years.

Critics say many of the students at these schools are not prepared for law school and will likely never pass the bar.

"Charlotte Law is among several dozen law schools that my organization, Law School Transparency, identified as using; exploitative admissions and retention policies," wrote Kyle McEntee, executive director of Law School Transparency in Bloomberg Law. "We argue these schools adopted such policies to maintain the flow of tuition dollars, usually paid for with federal student loans."

It is one of seven schools with a median LSAT that Law School Transparency labels as extreme risk. 

Charlotte’s bar pass rate has also dropped, from 61.72 percent in 2013, to 46.26 percent in 2015.