The Charleston School of Law has worked its way off one U.S. Department of Education naughty list and is in the process of being removed from another, according to the school’s president.
During 2014 to 2015, the DOE gave the school a Financial Ratio Responsibility score of negative 0.6, which is not good. At minimum, a school needs a score of 1.5 to be considered financially healthy.
The department calculates the scores based on a school’s primary reserve ratio, equity ratio and net income ratio.
Charleston has scored poorly for the past few years as it grappled with plummeting enrollment amid controversy over a pending takeover deal with InfiLaw, a Florida-based consortium of bottom-tier law schools.
Ed Bell, a Georgetown trial lawyer, took the school’s reins in 2015 and began transitioning it from a for-profit to a nonprofit, an effort that is still underway but has already resulted in increasing enrollment and decreasing rancour on campus.
Now, Bell said the school’s FRR score has increased to 2.6. Three is the best possible score.
“This basically shows that the turnaround we were anticipating and seeing is now having a really good economic effect,” Bell said. He added that tuition costs have not increased — full-time tuition for 2017-18 is $40,596 — but the school has managed to retire some of its debt and is reducing costs.
Bell paid an undisclosed price (he would only say that it was “significant”) for one-third interest in the school and personally took on $6 million in debt that CSOL owed to InfiLaw as part of an operating agreement. He said the school satisfied its debt to InfiLaw in December.
Charleston’s finances are not yet public, but its books will eventually be opened as part of the change to a nonprofit. That effort is nearing the final stage with the American Bar Association, according to Bell. Then the school will have to get approval from the DOE, IRS and South Carolina Commission on Higher Education.
Attempts to speak with DOE representatives before press time were unsuccessful.
In January, Charleston appeared alongside the names of more than 800 other institutions, primarily vocational schools, such as cosmetology institutes, that had flunked the DOE’s gainful employment standards, which compare graduates’ debt payments to their incomes.
According to the DOE’s numbers, Charleston’s 2014 grads had a median annual income of $45,200 and spent 20.4 percent of that income on debt payments. Under DOE regulations, schools face penalties, including the loss of federal financial aid, for sending students out into the world with loan payments that exceed 8 percent of their total yearly income.
Schools that flunked the gainful employment test can appeal the DOE’s findings, which is what Charleston is doing, according to Bell. He said the school discovered that the DOE’s data was flawed.
“Yes, we were on the DOE naughty list, but we’ve been allowed by the DOE to do an independent audit, which found that the DOE used improper numbers,” he said. “If you plug in the correct numbers we are not on the list.”
He added that the school is having “ongoing discussions with the DOE, and we are confident that we will not be on the DOE naughty list.”
Follow Phillip Bantz on Twitter @SCLWBantz