Brooks Institute, Hallmark Institute to Close

Posted by on Friday August 19, 2016 | Business

California-based Brooks Institute and Massachusetts-based Hallmark Institute of Photography have cancelled classes for the fall and announced plans to close down. The two schools, both private for-profit visual arts colleges, have struggled over the past decade with declining enrollments, financial stress, and management shake-ups. Administrators are also blaming new regulations regarding for-profit schools.

“[R]ecent changes in economic and regulatory conditions have had a significant, prolonged negative impact” on Brooks Institute, said spokesperson Kristen Howard in a prepared statement announcing the closure on the school’s website. “Our tireless attempts to mitigate this impact through contraction, strategic planning and innovation were sadly unsuccessful.”

Last year, the Department of Education announced its so-called “Gainful Employment” regulations that require for-profit schools to inform prospective students about earnings of former students and their levels of debt. The new regulations also set accountability standards that shut off the tap of federal student aid to schools whose graduates have annual loan payments exceeding 8 percent of their gross income.

Those regulations are meant to prevent for-profit schools in particular from leaving graduates buried in student loan debt, and sticking taxpayers with the cost of defaults. The regulations followed a 2011 lawsuit by the Department of Justice against Education Corporation, alleging the for-profit education company had fraudulently collected state and federal financial aid. (See “The Art Institutes: Legitimate Photo Schools or Accessories to Fraud?”)

The owners of Brooks have cancelled fall classes, and will close the school completely on October 31, according to the announcement.

Brooks Institute, located in Ventura, California, has been under new ownership since June, 2015. It was purchased last year by GPHomestay, a Cambridge, Massachusetts-based company specializing in services for international students. GPHomestay abruptly terminated the contract of Brooks Institute president Edward Clift last week, according to the Ventura County Reporter. Clift told the newspaper he was “puzzled” by the decision and said, “A turnaround was in progress.”

Hallmark Institute of Photography in Turners Falls, Massachusetts, will close in October, after the fall graduation ceremony for its last class of 10 students. The plans to close the school were confirmed by Lisa Robinson, who is a photography instructor and the acting campus administrator at the school.

Premier Education Group, which owns Hallmark, laid off president Ed Martin and other Hallmark administrators in early July. Premier told staff and faculty at the same time of its plans to close the school. “We were not given a reason,” Robinson says. She referred further questions to Jessica Mastrogiovanni, VP and general counsel of Premier Education Group.

Mastrogiovanni did not immediately respond to PDN’s request for comment.

Besides facing the tougher student loan rules, Hallmark has struggled financially in recent years. The school has had declining enrollment, and it was defrauded several years ago by former owner George J. Rosa III. He pled guilty to bank fraud and tax evasion in 2014.

Rosa had been charged for diverting $2.6 million in school funds for his own personal use, and then covering up the theft by cooking Hallmark Institute’s books. He had borrowed money from a Massachusetts bank to fund projects at the school. The bank took possession of Hallmark after Rosa defaulted on the loans. The school was subsequently sold to Premier Education Group, its current owner.

Related:
Former Hallmark Institute Owner Pleads Guilty to Fraud, Tax Evasion
The art Institutes: Legitimate Photo Schools or Accessories to Fraud?

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