Department of Education Blocks Funds for Two Trade Schools

Posted By Eliana Osborn on February 4, 2016 at 3:11 pm
Department of Education Blocks Funds for Two Trade Schools

Two trade school systems – Marinello Schools of Beauty and Computer System Institute – are no longer eligible to receive federal student aid dollars.  After investigation by the Department of Federal Student Aid, regulators determined that both schools had serious policy violations.

This isn’t the first time that the FSA has been involved with Marinello – the school was earlier placed on warning with heightened cash monitoring.  23 campuses in total are in jeopardy, with their program participation set to expire at the end of February.  They have two weeks to dispute FSA’s claims.  According to a Department of Education press release, “Marinello was knowingly requesting Federal aid for students based on invalid high school diplomas, underawarding Title IV aid to students, charging students for excessive overtime, and engaging in other acts of misrepresentation.”

Mariello Schools of Beauty operate 56 cosmetology schools in Nevada, California, Kansas, Utah, and Connecticut.  The Nevada and California campuses are the ones involved in FSA violations.  The National Accrediting Commission of Career Arts and Scientists had previously certified Marinello as compliant with industry standards, allowing them to participate in federal aid programs such as Pell grants and student loans.

Computer System Institute has three campuses in Illinois, where 2,600 students will be affected by blocked federal aid.  CSI is charged with reporting false job placement rates, not just to students but to the Department of Education and accreditors.  This is a common complaint among for-profit schools that have been criticized recently for deceptive recruitment.  According to the Washington Post, thirty schools have been barred from federal dollars in the past three years.

Both Marinello and CSI have been denied recertification, meaning they will not be able to continue participating in the federal financial aid system.  Other Marinello campuses will not be affected by this action.  An estimated 2,100 students attend the 23 involved sites.

Earlier in 2016, California blocked new enrollment by Marinello at any of the company’s 45 locations in the state.  The Bureau for Private Postsecondary Education issued this Emergency Decision in January “based on an immediate danger to public health, safety, and welfare.”  Specifically, they cited a “substantial failure by the institution to meet institutional minimum operating standards related to financial resources.”

Marinello, owned by B&H Education, Inc., has been in operation since 1905.  A spokesman defended the schools, calling all charges unfounded, but acknowledged that the institution may not be able to survive without participating in the federal aid program.

UPDATE: As of February 4th, officials at Marinello Schools of Beauty announced that they will be shutting down all campus operations. Campuses in California, Nevada and Utah will close today, February 4th, and campuses in Connecticut and Kansas will close Friday, February 5th. In a news release, school officials said that they will work to transfer the 4,300 students who will be affected. The institution also posted a letter to students about the closure on their website.

Eliana Osborn
Eliana Osborn is an associate English professor at Arizona Western College, with degrees from Brigham Young University and Northern Arizona University. She’s published widely in forums such as The New York Times, the Washington Post, the Christian Science Monitor, and the Chronicle of Higher Education.

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