750 First Street, NE, Suite 980 ● Washington, DC 20002-4223 ● t – 202.336.6780 ● f – 202.842.2593 ● www.acics.org

ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS

October 31, 2018 VIA E-MAIL AND CERTIFIED MAIL regulatory.eca@ecacolleges.com Mr. Stuart Reed Chief Executive Officer Education Corporation of America 3660 Grandview Parkway, Suite 300 Birmingham, AL 35243 Subject: Show-Cause Directive – Financial Adverse RE: Virginia College, LLC, Birmingham, Alabama - 00016224 (C) Dear Mr. Reed: On October 18, 2018, ACICS received a copy (attached) of the Complaint filed by Education Corporation of America (ECA), et al. against the United States Department of Education seeking declaratory and injunctive relief and the appointment of a receiver in order to enable the continued provision of educational activities to the approximate 20,000 students at its institutions without interruption or disruption. The complaint reveals that ECA, which includes Virginia College, LLC and all of its institutions, has experienced financial difficulties that have resulted in lawsuits and threatened exercise of remedies by its creditors. A copy of ECA’s emergency motion seeking relief was also provided to ACICS. As stipulated in Section 3-1-203 of the Accreditation Criteria, the ongoing financial stability of ECA, and how it materially affects the ongoing operations of Virginia College, Brightwood College, Brightwood Career Institute, Ecotech Institute, and Golf Academy of America campuses, is of serious concern to the Council. Council Action Therefore, the Executive Committee, acting on behalf of the Council, has acted to direct Education Corporation of America to show cause in writing, at its December 2018 meeting, why the accreditation of all its institutions should not be withdrawn.

The institution must provide the appropriate in-writing show-cause review fee, as outlined in the Hearing/Review Fees section of the “Schedule of Fees” on the ACICS website, and notification of its intent to respond in writing, within ten (10) business days of receipt of this notice, by November 13, 2018. Failure to do so will be considered a deviation from the directives of ACICS and result in a withdrawal by suspension action in accordance with Section 2-3-402 of the Accreditation Criteria.

Mr. Stuart Reed October 31, 2018 Page 2 of 4

In response to the show-cause directive, the organization must submit the following information via the online Show-Cause Application no later than November 27, 2018: 1. An explanation with appropriate and relevant documentation for each of the bases upon

which ECA seeks relief in its Complaint and emergency motion, including, but not limited to, ECA’s capital structure, landlord obligations, regulatory requirements, restructuring plan and any other precipitating factors to this lawsuit.

2. An explanation of and relevant documents related to the current status of the Complaint against the United States Department of Education and ECA’s emergency motion. In your response, include all communication concerning the matter with the Department of Education.

3. A summary of and relevant documents related to the current status of any landlord, vendor, or other creditor action(s) pending against ECA and/or any of its institutions, as well as, any such action(s) threatened but not yet filed.

4. A report outlining each ACICS-accredited institution’s status regarding participation in Title IV funding programs which includes any actual or potential limitations, suspensions, or terminations from any Title IV funding source for whatever reason, and the organization’s plans for dealing with any potential or actual interruption of Title IV revenues.

5. A full description of the depth and breadth of the organization’s efforts to mitigate incurred losses and facilitate a positive net income including, but not limited to, campus closures, programs in teach-out, and operational changes.

6. A Quarterly Financial Report (QFR) completed on Council forms (found here: http://www.acics.org/accreditation/content.aspx?id=4508) for the cumulative 9 months ended September 30, 2018, for the corporation.

7. Links to the webpages of all campuses where the show-cause directive has been posted, as well as copies of the notice to current and prospective students regarding the show-cause status of all institutions under the Virginia College, LLC ownership.

One hard copy of your response and one electronic copy via the Show-Cause application in the Virginia College, LLC corporate account must be received by the date indicated above. Failure to provide all information requested by the Council may result in the withdrawal of accreditation of the institutions.

Mr. Stuart Reed October 31, 2018 Page 3 of 4

Institutional Teach-Out Plan Further, in compliance with Section 2-3-230 of the Accreditation Criteria, the institutions must submit, via the Show-Cause application, Institutional teach-out plans for the Brightwood College and Brightwood Career Institute campuses (a teach out plan is already on file for the Virginia College institution) which include the following:

a. A listing of students with the student name; program of study; expected graduation date; and status of unearned tuition, refunds due, and current account balance for each student.

b. A listing of comparable programs offered at other nearby institutions in the event that teach-out agreements or transfer arrangements are needed for students to complete their programs elsewhere.

c. An identified custodian for all permanent academic records and contact information for this individual or entity, as well as the process by which students can obtain their records, in case of closure.

d. A description of the financial resources available to ensure that students can complete their programs or receive refunds if the institution does cease operations.

The Council notes that the following campuses are currently in teach-out and have submitted a campus closure application to ACICS. As such, teach-out plans are not required: 1. Brightwood Career Institute, Pittsburgh, PA 00011256 (MC) 2. Brightwood College, Sacramento, CA 00011298 (MC) 3. Brightwood College, Bakersfield, CA 00021867 (BC) 4. Brightwood College, Arlington, TX 00170646 (BC) 5. Brightwood College, Beaumont, TX 00170918 (BC) 6. Brightwood College, Clovis, CA 00171007 (BC) 7. Brightwood College, Palm Springs, CA 00171037 (BC) 8. Brightwood College, Dayton, OH 00235912 (MC) The Council is obligated to take adverse action against any institution that fails to come into compliance with the Accreditation Criteria within the established time frames without good cause. Please consult the Introduction of Title II, Chapter 3 of the Accreditation Criteria for additional information. Please contact Ms. Cathy Kouko at ckouko@acics.org if you have any questions. Sincerely,

Michelle Edwards President and CEO

Mr. Stuart Reed October 31, 2018 Page 4 of 4

c: Ms. Cathy Sheffield, Accreditation and State Liaison, U.S. Department of Education Ms. Tivoli Nash, Alabama Community College System (tivoli.nash@accs.edu) Ms. Teri Stanfill, Arizona State Board for Private Postsecondary Education

(teri.stanfill@azppse.gov) Dr. Michael Marion Jr., California Bureau for Private Postsecondary Education

(michael.marion@dca.ca.gov) Ms. Lorna Candler, Colorado Department of Higher Education

(lorna.candler@dhe.state.co.us) Mr. Samuel Ferguson, Florida Department of Education (joey.smith@fldoe.org)

Ms. Corinna Robinson, Georgia Nonpublic Postsecondary Education Commission (crobinson@gnpec.org)

Mr. Ross Miller, Indiana Board for Proprietary Education (rmiller@che.in.gov) Ms. Carol Marabella, Louisiana Board of Regents (carol.marabella@la.gov)

Ms. Kim Verneuille, Mississippi Commission on Proprietary School and College Registration (kverneuille@mccb.edu)

Dr. Michael Kiphart, Maryland Higher Education Commission (michael.kiphart@maryland.gov)

Dr. Kelly Wuest, Nevada Commission on Postsecondary Education (kdwuest@cpe.state.nv.us)

Mr. Scott Corl, NC State Board of Community Colleges (corls@nccommunitycolleges.edu)

Mr. Daniel Harrison, The University of North Carolina System (dsharrison@northcarolina.edu)

Mr. John Ware, Ohio State Board of Career Colleges and Schools (john.ware@scr.state.oh.us)

Ms. Patricia Landis, Pennsylvania Division of Private Licensed Schools (plandis@pa.gov)

Ms. Lane Goodwin, South Carolina Commission on Higher Education (lgoodwin@che.sc.gov)

Ms. Julie Woodruff, Tennessee Higher Education Commission (julie.woodruff@tn.gov) Ms. Cathie Maeyaert, Texas Higher Education Coordinating Board

(cathie.maeyaert@thecb.state.tx.us) Texas Workforce Commission (career.schools@twc.state.tx.us) Ms. Sylvia Rosa-Casanova, State Council of Higher Education for Virginia

(sylviarosacasanova@schev.edu)

FILED 2018 Oct-16 AM 11:56U.S. DISTRICT COURT

N.D. OF ALABAMA

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