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Dive Brief:
- Saint Augustine’s University, in North Carolina, has filed for Chapter 11 bankruptcy protection to help it address financial challenges and “move forward with a stronger foundation,” the institution’s governing board said Tuesday.
- As part of a broader plan to “position the institution for long-term success,” Saint Augustine’s announced a presidential transition and said it will drop its lawsuit against its accreditor. The university had succeeded last year in temporarily blocking the decision to withdraw Saint Augustine’s accreditation.
- The historically Black university signaled that it would move forward without accreditation in the near term and provide current students with teach-out options to finish their studies. Saint Augustine’s also plans to develop nondegree certificates and apprenticeship programs while “building a pathway toward reaccreditation,” it said.
Dive Insight:
Bankruptcy is a rare move for colleges, as it cuts off institutions from eligibility for federal student aid programs. That loss is commonly a financial death knell.
Saint Augustine’s Tuesday announcement offered few details about how the institution will operate going forward. It left out specifics on its teach-out plans, what its transformation would entail, or how it would operate without accreditation or access to federal student aid eligibility going forward.
The announcement described Chapter 11 as a “deliberate and strategic step to advance the University’s long-term sustainability while addressing current financial realities.”
The university also said it made the decision with support from its primary lender, Self-Help Ventures Fund, a nonprofit focused on helping underserved communities through financing for small business and nonprofit financing.
Earlier this year, Self-Help brokered a deal with Saint Augustine’s to provide millions in debt relief — with the provision that the university cut ties with two former chairmen who had been serving emeritus roles on its board, according to a report from WRAL.
Along with taking on Saint Augustine’s debt, Self-Help sought to help the university meet immediate obligations to pay its workforce.
The bankruptcy filing follows a series of emergency Saint Augustine’s board meetings begun in mid-April to address the possibility. When it filed on Monday, the university had $50 million to $100 million in liabilities, and assets between $100 million and half a billion dollars.
Among its largest unsecured creditors were federal and state agencies. It owed the Internal Revenue Service $14.4 million and North Carolina Department of Revenue $1.7 million, as well as millions more to the U.S. departments of Commerce, Interior and Education. The university listed those, along with all its other largest unsecured debts, as disputed in its bankruptcy filing.
Among other changes Saint Augustine’s announced Tuesday, the institution said its interim president, Jennie Ward-Robinson, has stepped down just months after being appointed in December.
Filling the role, also on an interim basis, is Verjanis Peoples, who most recently served as the university’s interim provost and vice president of academic affairs. Peoples becomes the university’s eighth leader since 2019.
As for the university’s decision to drop its lawsuit against Southern Association of Colleges and Schools Commission on Colleges came after discussions with the accreditor.
“The Board determined that continuing litigation would not be a prudent use of resources,” the university said, adding that it and SACSCOC aimed to “ensure impacted students were able to graduate from an accredited institution.”
The accreditor first voted in 2023 to pull Saint Augustine’s accreditation after years of financial and governance woes, and after requiring the institution to develop a contingency teach-out plan should things go downhill.
Last year, SACSCOC denied the university’s appeal of its accreditation loss. In August, Saint Augustine’s responded with a lawsuit, alleging that SACSCOC’s decision was “unsupported by the evidence.” The university won a preliminary injunction that kept its accreditation temporarily in place while the case played out.
The university said Tuesday it had expected the litigation to wrap up next month.
After SACSCOC’s 2023 decision, the university’s enrollment collapsed. Between 2023 and 2024, fall headcount plummeted by over 80% to 175 students, according to federal data. That’s a fraction of the 1,044 students the nearly 160-year-old Saint Augustine’s had enrolled five years prior.
