Feds Deny Florida Coastal Aid Reinstatement, Saying Law School Acts ‘Irresponsibly’

May 13, 2021

Florida Coastal School of Law (Coastal Law) in Jacksonville has been dealt a major blow by the U.S. Department of Education (DOE)’s Federal Student Aid (FSA) office, which announced Thursday the law school’s application for reinstatement of student federal aid programs has been denied.

The FSA said its investigation of the law school’s financial statements “raises substantial doubt about its ability to continue operations.”

The feds said Coastal Law’s reinstatement application has been denied for three reasons:

  • Failure of financial responsibility standards
  • Failure to meet fiduciary standards of conduct
  • Failure to meet standards of participation, including the standards of administrative capability

"Too often, we see for-profit schools that try to take advantage of students, misuse taxpayer dollars, and skirt the rules to participate in federal student aid programs,” Secretary of Education Miguel  Cardona said in an email  to WJCT News. “Today we want to be heard and understood by for-profit schools around the country: We will be vigilant in ensuring they meet their commitments to students, families, and taxpayers.”

In a letter the FSA sent to Coastal Law, the DOE office said it reached its determination after looking at two years’ worth of financial statements.

The DOE told WJCT News in an email:

Florida Coastal School of Law failed to meet these standards because its financial composite score for the past two fiscal years was -1.0, the lowest possible score. The institution carried significant debt due to a declining student population and issues surrounding the closure of two other schools that were also under the same ownership: Charlotte School of Law in Charlotte, North Carolina and Arizona Summit Law School in Phoenix, Arizona.

Additionally, the audited financial statements for Florida Coastal School of Law contain a disclosure that raises substantial doubt about its ability to continue operations. Last month, the private equity firm that had owned 98.6% of the institution relinquished its ownership. This move demonstrated its unwillingness to assume any potential liabilities related to noncompliance rather than using its resources to support the school’s continued participation in the federal student financial aid programs.

Florida Coastal has 10 days to appeal the decision with the DOE. 

“The action delivers on President Biden’s commitment to stop for-profit education programs from profiteering off students,” the DOE wrote in its news release.

Coastal Law previously tried to convert its business to a nonprofit, but the American Bar Association denied the application in 2019, according to WJCT News partner the Jacksonville Daily Record. Shortly after that, then-Dean Scott DeVito resigned, “effectively immediately,” after four years on the job.

Also in 2019, after the law school did not meet fiscal responsibility standards required by the DOE, the agency required Coastal Law to submit a letter of credit before student loan money was released, the ABA Journal reported

Florida Coastal School of Law was founded in 1996 and is an ABA-accredited institution, according to its website. The school had been owned by InfiLaw Systems, a corporate entity under the private equity firm Sterling Partners. Another one of InfiLaw Systems’ schools, North Carolina’s Charlotte School of Law, closed in 2017 after the American Bar Association placed it on probation, according to the New York Times

Jacksonville attorney David Frakt has been critical of Florida Coastal’s admissions practices for years now. “There was a time when they were admitting large numbers of students who didn’t have an aptitude for the study of law, and I felt that they were exploiting them for their money,” Frakt said.

When Frakt shared his experience with the school with The Atlantic in 2014, the average InfiLaw graduate had $204,000 in debt, and nearly a quarter were unemployed. 

According to more recent statistics provided by a spokesperson for Florida Coastal, as of 2020, about 9.5% of graduates are currently unemployed, well above the national rate. The spokesperson highlighted Florida Coastal’s commitment to addressing the lack of diversity in the law profession: 40% of its students are people of color, compared to 13% of law students nationwide, and 60% of Florida Coastal students are female, compared to 36% nationwide. 

Although Frakt agreed that the school had done some work to improve its admissions policies, the for-profit model would always complicate things. 

“I think it is possible to run a for-profit law school ethically, but there is a tension between the desire of the ownership to make a profit and the need for the university to spend the resources on education and so forth. So it has been very successful, InfiLaw, at making money,” Frakt continued. “But the profit motive drove them to admit unqualified students, and that, ultimately, is their downfall.” 

“We are currently reviewing the letter with counsel and looking at our options. ” said Florida Coastal President Peter Goplerud in response to a request from WJCT News for comment on the FSA’s findings. “At this time, we are doing all we can to ensure our students receive the education they need to continue on their path to becoming attorneys. Today and tomorrow, our students are taking finals and our faculty and staff are focused on keeping the students on track.”

Bill Bortzfield can be reached at bbortzfield@wjct.org or on Twitter at @BortzInJax.

Contact Sydney Boles at sboles@wjct.org, or on Twitter at @sydneyboles.