Charleston Fashion Week: Day 2 (copy)

The Art Institute of Charleston student runway show during Charleston Fashion Week. File

The rise and fall of the Art Institute of Charleston took just 11 years, carrying with it the aspirations of hundreds of young artists — and leaving some of them struggling beneath a mountain of debt.

The for-profit chain of colleges opened its Market Street location in April 2007 amid fanfare from local political leaders, including then-Mayor Joe Riley, who had invited the school to train workers for the hospitality and restaurant industries.

But today, as the Art Institute of Charleston's new owners prepare to cut their financial losses and shutter the campus at the end of 2018, even the college's founding president senses that something went awry.

"I’ve always thought about writing a book, and the title would be ‘How Greedy Capitalism Ruined the For-Profit Higher Education Sector,'" said Rick Jerue, who served as the Art Institute of Charleston's president from 2007 to 2013. "You know, education, it’s a product, I’ll admit that, but all products aren’t as profitable as other products, and education has a mission way beyond just the bottom line. And I think some of the corporate leaders lost sight of that."

Some current and former students say they received a quality education from knowledgeable instructors at the Art Institute but that the school's aggressive recruiting methods and sky-high tuition seemed designed to squeeze them for federal financial aid and private loan money.

The U.S. Department of Education has occasionally cracked down on for-profit colleges that saddle students with insurmountable debt while siphoning millions of dollars of federal aid to private investors. The nationwide chain of ITT Technical Institutes closed all its campuses in September 2016, about two weeks after the government cut off its pipeline of financial aid money.

The Art Institute's critics say the school was operating under a similar business model. The Charleston school is a branch of the Art Institute of Atlanta, where Department of Education records show about 70 percent of annual revenues came from federal financial aid. (One estimate placed the figure closer to 85 percent as of 2014, with Veterans Affairs funding included).

In return for that outlay of public money — totaling $5.8 million at the Charleston location in the 2015-16 school year alone — only half of students returned to the Art Institute of Charleston after their first year. One-third of students graduated within six years, according to the Department of Education's College Scorecard.

Students graduated with a median of $29,700 in federal debt — not including private loans — and only 27 percent had paid a single dollar toward that debt three years after leaving the school.

Officials at the Art Institute of Charleston have been referring all interview requests to Anne Dean, a spokeswoman for school owner Dream Center Education Holdings LLC. Dean has not returned more than eight phone calls in the past three weeks. In a prepared email statement on July 11, Dean said multiple campuses were closing due to declining enrollment and increased demand for online programs.

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Art Institute of Charleston

Dusty Rose Smith talks about the closing of the Art Institute of Charleston before the end of the year. Brad Nettles/Staff

On the outs

Looking back, students and industry leaders saw signs in recent years that the Art Institute was on the way out. Once an active participant in events like the Wine + Food Festival and Charleston Fashion Week, the school's public profile began to diminish as enrollment declined and the school made cuts to its teaching faculty.

Current students find themselves in a tight spot. Dusty Rose Smith, a fashion design major originally from Alabama, said her first two quarters at the Art Institute cost about $25,000, including digital textbooks and sewing materials — and her family took out loans to cover the expense.

When the news broke the school was shutting down, she began calling other fashion design schools to ask about transferring — but as soon as she mentioned the Art Institute, they all said they wouldn't take any of her transfer credits.

"I lost this full semester, I'll lose the next semester, and then I'll have to retake classes," Smith said.

Erin Fitzgerald said she knew the Art Institute of Charleston would be expensive when she enrolled in 2012 — but at age 17, she might not have made the wisest economic decision.

Still, she said she thrived in the accelerated bachelor's degree program in graphic design, knocking courses out on a fast-moving quarterly schedule. Plus, she loved her instructors, who were all working in the industry and helped her land a graphic design job within a week after graduation.

When she heard the news of the school's impending closure in July, she was saddened but not surprised to see her former professors out of a job.

Mickey Bakst wasn't sad to hear the Art Institute was leaving his city. The gregarious general manager of Charleston Grill said he saw a few Art Institute culinary grads come to work at the restaurant over the years but at least two had to quit and move in with their parents, haunted by loans they couldn't hope to pay back.

"I mean, kids were coming out with $90,000 worth of debt. In an industry that’s paying $15 for line cooks, that’s really hard to manage," Bakst said.

An expensive flop

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Rick Jerue (copy)

Rick Jerue, founding president of the Art Institute of Charleston. File/Wade Spees Staff

Jerue said he stepped down as president of the Art Institute of Charleston after watching its parent company, Education Management Corp., restrict the school's autonomy, scale back student-centered programs like career placement services, and reinvest its money into marketing and recruiting efforts.

Jerue isn't alone in that assessment. The Harvard Law School's Project on Predatory Student Lending has been documenting the travails of Art Institute students around the country for years, and the activist group Debt Collective has begun advising students not to sign any paperwork handed out by Art Institute administrators.

Some students at closing colleges can have their federal student loan debts canceled through the Department of Education's Closed School Discharge program. But Debt Collective co-founder Thomas Gokey said officials at Art Institute campuses across the country have been pressuring students to sign their rights away by transferring to a surviving Art Institute location or online program.

Gokey said he is still trying to understand the latest developments at the Art Institute. Education Management Corp., itself once co-owned by the financial titan Goldman Sachs, decided to sell most of its Art Institute, Argosy University and South University properties to an unlikely buyer in 2017: a nonprofit subsidiary of the Los Angeles-based Dream Center Foundation, a Pentecostal ministry that serves homeless and drug-addicted populations. The sale reportedly cost $60 million.

Education Management declared bankruptcy June 29. Dream Center Education Holdings LLC began shutting down schools, including 18 Art Institute campuses, around the same time.

"It was partly a PR stunt — 'We’re no longer these greedy for-profit schools, we’re nonprofit.' But these are nonprofit front groups that are channeling a tremendous amount of money off of these schools," Gokey said.

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Culinary Institute of Charleston

Baking and pastry students Megan Scharett (left) and Muireann Starnes prepare desserts in the kitchens of the Culinary Institute of Charleston, Trident Technical College's cooking program. Provided/Trident Technical College

Another option

At least in the culinary arts, aspiring students in the Charleston area had another option all along — and a much cheaper one. Trident Technical College has been offering culinary courses since the late-'80s, revamping its offerings with the creation of its Culinary Institute of Charleston in 2005.

For residents of the tri-county area, fall tuition for a full course load at Trident is just $2,200 — and many students can knock the price down to less than $1,200 with state tuition aid from the S.C. Education Lottery.

In the week after the Art Institute announced it was pulling the plug, at least six culinary students from the school applied to Trident's program, according to Culinary Institute of Charleston Dean Mike Saboe.

One of those students was Sierra Hodge. She said an instructor there gave her a tour for more than one hour when she stopped by the public technical school's main campus in North Charleston last week.

Originally slated to begin classes July 9 at the Art Institute, she was stunned by the last-minute announcement on July 2 that the school would no longer enroll new students.

Hodge was packing the family car to move to Charleston when she heard the news. She quit packing and broke down crying outside her parents' house in Hickory, N.C.

Susanne Hodge held her daughter and seethed.

"She's been planning this all year, knowing her life was on track — and then in 10 minutes, everything fell apart," Susanne said.

Sierra is a planner. She started touring colleges during her 10th-grade year and received an early acceptance to the Art Institute's culinary arts program in September 2017. The school didn't require SAT scores or two foreign language credits, so she skipped both — a decision that came back to haunt her this summer as she scrambled to find another college that would let her enroll.

"It's been a hot mess," Sierra said.

Reach Paul Bowers at 843-937-5546. Follow him on Twitter @paul_bowers.