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Federal student financial aid yanked at Charlotte School of Law

Updated: After reportedly making “substantial misrepresentations” to current and prospective students regarding its compliance with ABA accreditation standards, Infilaw System’s Charlotte School of Law will lose its federal student financial aid, the Department of Education announced Monday.

“The ABA repeatedly found that the Charlotte School of Law does not prepare students for participation in the legal profession. Yet CSL continuously misrepresented itself to current and prospective students as hitting the mark,” U.S. Under Secretary of Education Ted Mitchell said in a press release. “CSL’s actions were misleading and dishonest. We can no longer allow them continued access to federal student aid.”

Between 2015 and 2016, 946 students at the North Carolina school received $48.5 million in federal student loans, according to the department. The school is one of three for-profit law schools in the Infilaw consortium.

The financial aid cutoff begins Dec. 31, and Charlotte School of Law has until Jan. 3, 2017 to submit evidence disputing the department’s findings.

On Friday, two students filed a class action lawsuit against Charlotte School of Law, accuses the law school of engaging in misrepresentation, unjust enrichment, breach of fiduciary duty and constructive fraud.

The ABA first informed the law school that it was out of compliance with various standards in February 2016, and again in July 2016. At neither time was the information shared with current or prospective students, according to the education department. The standards in question include 301(a), which states that law schools must maintain a legal education program that prepares students to be lawyers, and 501(a) and (b), which address admissions policies and practices.

The Charlotte law school appealed the ABA finding, and it was upheld (PDF) in October. At that time, the council of the ABA’s Section of Legal Education and Admissions to the Bar placed law school on probation.

The Charlotte Observer reported today that Jay Conison, the school’s dean, said his school had a plan to meet ABA standards and be back in compliance with in two years.

In statement about the Department of Education’s finding, the law school described it as “unexpected.”

“The DOE letter is primarily based on the American Bar Association decision of November 14, 2016 to place the Charlotte School of Law on probation, but ignores the fact that the school remains ABA accredited while it is on probation and working to take steps to address the issues in the probation action,” the statement read. “The Charlotte School of Law is working intensively to respond to the DOE and, most importantly, protect our students.”

The school still has accreditation, Barry Currier, the ABA’s managing director of accreditation and legal education, wrote in a statement (PDF) released Monday.

“Under the ABA Standards and Rules of Procedure for Approval of Law Schools, formal council action is required for a school’s approval to be withdrawn,” he wrote, noting that the department’s actions could “have a bearing” on the school’s ability to be in compliance with the standards.

Others wondered if the department’s decisions could signal more changes ahead, particularly for law schools with low bar-passage rates.

“This is potentially a cataclysmic event for legal education. The Department of Education’s reasoning could easily be extended to other law schools,” Paul Caron, an associate dean and professor at Pepperdine School of Law, wrote in an email to the ABA Journal.

“Hopefully, today’s action by the DOE will finally cause law schools to confront the existential crisis facing legal education,” says Caron, who writes at TaxProf Blog.

Last updated Dec. 23 to note the lawsuit filed against the school.