Accreditors only noticed how badly New York’s Dowling College was doing when its “financial positioned weakened” last year, The Wall Street Journal reports.
The liberal arts school with two campuses on Long Island should have drawn red flags earlier, according to the American Council of Trustees and Alumni: It had a graduation rate of 18 percent and drew an “F” on the group’s What Will They Learn? college guide.
The shuttered school filed for Chapter 11 bankruptcy protection Tuesday, three months after it lost its accreditation, in order to sell its campuses, the Journal reports:
The school estimates its total assets to be worth between $100 million and $500 million, according to papers filed with the U.S. Bankruptcy Court in Central Islip, N.Y. It reported debts of $50 million to $100 million.
#DowlingCollege had a #GradRate of 18% and an "F" from #WWTL. Accreditors only closed it due to financial concerns. https://t.co/pEXi6nrWEa
— American Council of Trustees and Alumni (ACTA) (@goACTA) November 30, 2016
The lion’s share of its debt is owed on tax-exempt municipal bonds:
Some of the school’s municipal bond debt issued in 2006 to finance a new sports facility last changed hands on Monday at 96.75 cents on the dollar, according to Municipal Securities Rulemaking Board data. The bonds were issued with an insurance policy from ACA Financial Guaranty Corp. …
It became the first higher-education institution rated by Moody’s Investors Service to default.
It was only challenged with losing its accreditation a year ago. According to the Journal:
Dowling briefly flirted with the idea of staying open with help from a strategic partner, but a deal to boost enrollment and shore up its multimillion-dollar debt load ultimately fell through.
MORE: Sweet Briar brought the bling before its demise
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