4 Investigates: Bankrupt university leaves students empty-handed
ALBUQUERQUE, N.M. – A college education is supposed to be the ticket to success. But what happens when the promise of a brighter future becomes nothing more than another bill in your pocket?
A private university in Albuquerque went bust in 2020 leaving some students empty handed and their aspirations even further out of reach.
“I feel overlooked and used really,” said Renee Montoya, a former student at the Southwest University of Visual Arts.
SUVA was a once-private arts school in Albuquerque, formerly known as The Art Center Design College.
“Because I don’t have that piece of paper, every new job I apply for has to be an entry level job,” said Dan Gutierrez, another former student of SUVA.
The promise of a brighter future brought students to the school for decades.
“They were willing to help you any type of employment after the schooling after you graduate and everything, so I think that’s just what pulled me in even more,” said Denise Galvez, a SUVA graduate.
A pricey private education was an investment many students thought they’d get a return on.
“I heard a radio ad, then went there and liked everything and the rest, I guess, is history,” said Ivan Rodriguez, another SUVA graduate.
But, SUVA went bankrupt in 2020, and just like that, students say their ticket to success was gone.
“At this point, I wish I would have gone to UNM,” said Gutierrez. “I wish I would have gone to my dream school in New York because, at this point, I probably would have paid the same amount.”
Dan Gutierrez went to SUVA in the early 2000s his four-year-degree took a little longer. But he was a senior when the school shut down. Just a few credits away from earning a bachelor’s degree.
“I have a bill for $60,000,” he said. “I’d rather have a Tesla than a piece of paper that says ‘we don’t have transcripts.’”
Transcripts are the key, a passport to another school with credit for what’s been learned.
But while some students don’t have a transcript, you can bet they still have bills for their student loans.
Renee Montoya racked up $50,000 in federal student loans. She left the school after a couple of years, and still can’t get a SUVA transcript.
“I have been turned down by two schools now because I can’t get that transcript from that school,” said Montoya.
Others who graduated say they walked the stage only to be handed another bill.
“I stupidly just assumed everything would work itself out,” said Galvez, a SUVA graduate, referring to getting her paper degree. “So I just kind of left it for the time being.”
The paper degree never came. Other graduates said they finished school with more than $90,000 in student loan debt. So when they got the bill instead of the diploma, they had questions about what else they were being charged for.
“That’s why I wanted to see the itemized list, like what do I owe?” said Ivan Rodriguez.
Those financial details were hard to come by for all the former students KOB talked to.
Eddie Vargas said when he went there, Isleta Pueblo paid his tuition at SUVA. When collections started calling that’s when he discovered SUVA said he owed around $20,000 to loans he said he never took out.
“To have this free ride to school and still be screwed over and then not be able to pursue anything else because this is looming, that ball of chain that’s forever going to be associated with me and my name,” said Vargas.
“There’s no accountability,” said Montoya.
The New Mexico Higher Education Department said that’s because the Albuquerque location was a branch campus and when it closed, students and records moved to SUVA headquarters in Tucson, Arizona. Officials said at that point, it was no longer under New Mexico’s purview. While it was open, the New Mexico Higher Education Department handled four formal complaints against the institution.
But since we’re talking about New Mexico students, years before its closure, we asked the Higher Education Department for an on-camera interview, a spokesperson declined via email: “Unfortunately, we cannot provide an interview on this subject as all pertinent information has already been addressed via email correspondence and your earlier IPRA request and closing procedures for SUVA with the exception of transcripts are under the purview of the Arizona State Board for Private Postsecondary Education.” [Email Q &A below]
Kevin LaMountain is the executive director for the Arizona State Board for Private Postsecondary Education he said he helped walk SUVA through the closing process in Arizona just a couple months after the Albuquerque branch closed 2020.
“The challenge you have as a state entity, I don’t run the school, I don’t know everything they have and what they don’t have, and as we were reviewing it, it seemed that they were certainly providing us with what we believed was appropriate, and now in hindsight, a few years later there were certainly holes in some of the documents they were providing.”
“We did not have any laws on the books that mandated that private, whether they were profit or nonprofit institutions, had to provide any information to the state,” said New Mexico State Senator Elizabeth ‘Liz’ Stefanics.
It’s why she helped pass legislation requiring private schools disclose more information to students up front.
Though it didn’t go into place until the year after SUVA closed.
“Make people aware that when you choose to go to a private institution there might be some risk, even if it’s been in existence 10, 25, 50 years, you don’t know what the economy is going to do to that institution,” said Liz Stefanics.
Because the school doesn’t exist anymore, LaMountain said it’s hard go after anyone. As for the students, there’s a chance they could qualify for federal loan forgiveness.
“If a student believes that they were harmed or defrauded or that the institution did not provide the services that were provided to them then they could institute a claim against that institution which unfortunately is gone,” said LaMountain. “It’s gone through bankruptcy and it’s no longer an entity but they can seek relief through the Department of Education through that Borrowers Defense claim.”
It’s a program LaMountain said stalled during the Trump administration. But since, the United States Department of Education has announced billions of dollars in relief for students who claimed to be defrauded by other institutions.
Officials in Arizona are doing everything they can to try help students get through this. They believe there are paper records in an Iron Mountain storage facility, they are working right now to get access to that.
KOB asked the New Mexico Higher Education Department a number of questions over email:
What responsibility does the Higher Education Department have in protecting New Mexicans and holding these schools accountable:
“As a condition of state authorization, private and proprietary schools seeking to operate in the state of New Mexico must provide assurances that they are in compliance with standards put forth in statute and state code. These include the institution’s self-evaluation process, accreditation (for degree granting institutions), degree standards, information provided to students, admissions procedures, tuition refund policy and procedures, student record maintenance, financial stability, student complaint procedures, and surety bond to mitigate each student’s financial damage in case of closure. You can find more information about state authorization on our website here: FAQ | NM Higher Education Department (state.nm.us) and NMAC 5.100.6.
The New Mexico Higher Education Department takes student consumer protection seriously and championed a bill requiring state-authorized schools to publicly disclose information to current and prospective students about the school’s cost, average graduate earnings, job placement rates of graduates, etc. Gov. Lujan Grisham signed the bill into law and it went into effect in January of 2021. You can find more information about these consumer protection measures in this press release and information about the bill is available here.
Surety bonds are in place for each state-authorized institution operating in New Mexico and are typically set at around 20% of gross tuition revenues. However, because SUVA’s Albuquerque branch closed in August of 2020, the bond was cancelled once the school ceased to have physical presence in New Mexico. SUVA’s Albuquerque operations were moved to their main campus in Tucson, AZ where they operated until filing for bankruptcy in December of 2020, and were no longer under the purview of the New Mexico Higher Education Department.”
Why weren’t surety bonds utilized:
“In order for students to benefit from surety bonds in the state of New Mexico, the school in question must have physical presence in New Mexico at the time that the bankruptcy/closure/fraud, or other damaging event occurs. At the time of the closure of SUVA’s Albuquerque campus, the students being served by that campus either worked directly with SUVA to continue their studies via distance learning or relocated to Tucson to continue their program. Following the closure of the Albuquerque campus, neither the institution nor the students fell under the purview of New Mexico rules governing private postsecondary institutions. NMHED has no record of notice provided by SUVA to cancel the surety bond, but the bond could not have been paid out at the time of SUVA’s closure since the institution was exclusively operating in Arizona at that time. State statute and rule prevent NMHED from issuing payment related to schools not actively operating in the state of New Mexico.
As for financial monitoring, the Higher Education Department follows a monitoring cycle aligned with an institution’s regional accreditation cycle with the Higher Learning Commission (HLC), which SUVA was accredited under. Their last accreditation renewal with HLC took place in 2018 at which time HED likewise renewed SUVA’s state authorization. The accreditation process of the Higher Learning Commission is rigorous and includes financial review of the institution and so HED considers HLC accreditation sufficient to prove financial stability at the time of reauthorization. The next scheduled reaccreditation by the HLC for SUVA would have been in 2028 at which time HED would have likewise reviewed the institution for renewal of state authorization.
If the closing of an institution’s branch and moving the institution’s operation to another state is completed according to the rules 5.100.8 pursuant to the Post-Secondary Educational Institution Act, the New Mexico Higher Education Department does not have the authority to make a claim against the surety bond.”