The Art Institutes logo
|Owner||Education Management Corporation (EDMC)|
|Location||Pittsburgh, Pennsylvania, US|
The Art Institutes (Ai) are a system of art colleges with over 30 locations across the United States currently enrolling new students. At it’s height, The Art Institutes had greater than 50 campuses. However, as the for-profit education sector came under scrutiny, many campuses saw a marked decrease in enrollment. As such, at least 19 schools are in the process of closing and helping students finish their degree programs.  The schools offer master's degrees, bachelor's degrees, associate degrees, and certificates in visual, creative, applied, and culinary arts. The Art Institutes' parent company, Education Management Corporation (EDMC), is headquartered in Pittsburgh, Pennsylvania.
In November 2014, EDMC was delisted from the NASDAQ amid financial difficulties, lawsuits, and investigations and its stock is valued at less than one cent per share.
Educational accreditation of The Art Institutes and their programs varies among campuses and programs. One of its accreditors, Accrediting Council for Independent Colleges and Schools (ACICS), has been criticized by a dozen states' Attorneys General for its lax standards.
In June 2016, the US Department of Education voted to end ACICS power to accredit. ACICS was stripped of its power to accredit in September. In December, nine additional Art Institutes were placed on probation by their accreditor, Southern Association of Colleges and Schools (SACS).
Thousands of former students of the Art Institutes claim they have been deceived and misled by the schools and their recruiters and have filed claims with the US Department of Education. Art Institute students are able to file defense to repayment claims with the US Department of Education.
In 2017, Education Management Corporation reported that it had sold the existing Art Institutes to The Dream Center Foundation, a Los Angeles-based Pentecostal organization. The sale was complete in October 2017.
Starting in 2000, The Art Institutes began offering bachelor's degrees and, in 2001, launched its distance education program, Art Institute Online, which began offering bachelor's and non-degree programs online.
Throughout the 2000s, The Art Institutes expanded through the acquisition of existing art colleges and the establishment of new Art Institutes. In 2001, there were around 20 campuses of The Art Institutes; this grew to approximately 30 locations in 2006 before reaching 50 Art Institutes in 2010.
EDMC's initial public offering (IPO) was in 2009. Todd S. Nelson, who was previously the CEO of Apollo Education Group, became an EDMC board member in 2007 and the Chairman of the Board of Directors in 2012.
In 2011, Frontline released a documentary titled Educating Sergeant Pantzke. In the documentary, Iraq war veteran Chris Pantzke discussed the lack of disability services at the school. According to Pantzke, "Being a soldier, you don’t want to quit, you don’t want to give up or fail." After doing his own research, Pantzke concluded that the degree he was pursuing wasn’t "worth much more than the paper is worth," and felt he was "throwing away taxpayer money" by using GI Bill funds.
Since 2012, The Art Institutes schools experienced a decrease in the number of new students enrolling, seeing enrollment numbers drop by approximately 20 percent between the second quarter of the 2012 fiscal year and the start of 2013. EDMC has attributed the drop in enrollment to limited access to Parent Loan for Undergraduate Students and the economic recession. In February 2013, EDMC announced plans for a three-year-old tuition freeze at The Art Institutes. Under this plan, the company pledged to maintain the current cost of tuition through 2015.
In June 2013, EDMC announced that its President John Mazzoni would resign effective July 14, 2013, after 27 years at the organization. Charles Restivo, Group Vice President, would become the Interim President of The Art Institutes.
In 2014, the US Department of Education reported that ten EDMC campuses, including several Art Institutes, were placed under heightened cash monitoring. The Art Institute of Pittsburgh was one of the schools listed.
In May 2015, EDMC announced that it would be closing the doors of 15 of the Art Institute locations. "A total of 5,432 students are enrolled among the campuses that are slated to close, according to a list provided by EDMC. The company will undergo a teach out process at each location, meaning each campus will continue to offer courses, student services and placement assistance until the last student has graduated, according to Hardman." Some of the campuses slated to close include ones in Atlanta, Ohio, New York City, Texas and Pennsylvania. In January 2016, EDMC announced that additional Art Institutes would be ceasing enrollments. These campuses are The Art Institute of California - Los Angeles, The Art Institute of St. Louis, and the Art Institute of Tucson. This brought the total number of Art Institutes campuses slated for closure to 18. At least 200 additional employees were laid off in May 2016. In June 2016, EDMC announced that the Art Institutes International Minnesota would be ceasing enrollments. That brought a total of 19 Art Institute campuses scheduled for closure.
In June 2016, Tim Moscato, chief operating officer at the Art Institutes, resigned amid more downsizing.
On September 8, 2016, Art Institutes students known as "I Am Ai" presented a notice to the Director of New England Institute of Art (NEIA) about a lawsuit that would be coming in 30 days. The lawsuit is being written by the Legal Services Center of Harvard Law School. On September 24, 2016, the Attorney General of Massachusetts expressed concern that the teaching duties at NEIA were being taken over by an unlicensed Indian company with no background in teaching US art students. The AG’s Office stated that if a proper education for NEIA students could not be ensured, that NEIA should shut down at the end of the 2016.
As of September 2016[update], there were 32 Art Institutes continuing to enroll new students, down from a count of 50 in 2013, as well as the Art Institute Online, with a total of 56,070 students. The Art Institutes schools account for about half of all EDMC schools and more than half of EDMC's total student population.
The Art Institutes offer degree programs at the associate's, bachelor's and master's levels, as well as non-degree diploma programs. Areas of study include graphic design, media arts and animation, culinary arts, photography, digital filmmaking and video production, interior design, audio production, fashion design, game art and design, baking and pastry, and fashion marketing.
The Art Institutes in Fort Lauderdale, Indianapolis, Kansas City, Las Vegas, Minnesota, New York City, Phoenix, Saint Louis, Salt Lake City, Tucson, Vancouver, Wisconsin, and York were accredited by ACICS, which has lost its accreditation power from the US Department of Education.
Nine additional Art Institutes (The Art Institute of Atlanta, The Art Institute of Houston, Miami International University of Art and Design) and their branch campuses in Charleston, Nashville, Arlington, Virginia Beach, Austin and San Antonio were placed on probation by their accreditor, Southern Association of Colleges and Schools (SACS), in December 2016.
Teach outs are a period of time when new student enrollment has stopped, and remaining students are give a period of time to finish their programs. In May 2015, EDMC spokesperson Chris Hardman stated that the teach outs would take two to three years. According to the New York State Department of Education, The Art Institute of New York City is expected to close by September 2017.
As of June 1, 2016, twelve Art Institute campuses were under heightened cash monitoring by the US Department of Education: Pittsburgh, Portland, Philadelphia, Atlanta, Fort Lauderdale, Minnesota, Colorado, Houston, Seattle, New York City, York, and Phoenix. Colleges are required to hold a certain amount of money to meet obligations in case the school closes prematurely.
In October 2000, EDMC announced the settlement of a lawsuit brought by a group of approximately 350 former students of The Art Institute of Houston. The plaintiffs claimed that "they were misled about the nature, quality and utility of the education they would receive at The Art Institute of Houston."
From 2011 to 2015, EDMC was involved in a United States Department of Justice investigation and lawsuit alleging both illegal recruitment practices by EDMC schools, including The Art Institutes, and fraudulent receipt of $11 billion in federal and state financial aid money. A 2011 US DOJ report claimed EDMC "created a 'boiler room' style sales culture and has made recruiting and enrolling new students the sole focus of its compensation system."
In May 2013, a federal judge in Pennsylvania rejected a bid to dismiss a lawsuit against EDMC by a former EDMC employee. The lawsuit alleges that the corporation and its affiliates engaged in a scheme to maximize profits from financial aid programs administered by the U.S. Department of Education. The complainant in the case, Jason Sobek, who worked as an admissions director for EDMC in Pittsburgh from June 2008 through November 2010, alleges that the firm falsified information given to the Department of Education that indicated they were in compliance with the loan programs’ eligibility requirements. In testimony that provided the basis for the lower court’s decision last October, Sobek alleged that EDMC operated a "carefully crafted and widespread for-profit education scheme [in which] defendants have defrauded the United States and its taxpayers out of millions of dollars in the form of federally backed student loans and grants."
In 2014, an investigation by the San Francisco City Attorney's office led to a $4.4 million settlement. The city claimed Ai used deceptive marketing tactics resulting in underestimated program costs for students and inflated job placement figures for graduates.
In November 2015, EDMC agreed to pay $95.5 million to settle claims of illegal recruiting, and consumer fraud. U.S. Attorney David Hickton said “Today’s global settlement sends an unmistakable message to all for-profit education companies: the United States will aggressively ferret out fraud and protect innocent students and taxpayer dollars from this kind of egregious abuse.”
In April 2016, two former Ai teachers filed suit in Alameda Superior Court claiming EDMC did not pay them a minimum wage or provide adequate rest periods "to reduce compensation and increase its own profits."
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