MONEY TREE: Texas College Suspends Fall Semester after Bankruptcy Filing
JACKSONVILLE, Texas (AP) — The oldest junior college in Texas will suspend its fall semester as it seeks a purchaser or new financial partner after filing for bankruptcy last month.
Lon Morris College, a 158-year-old United Methodist school in East Texas, said in a news release that the suspension follows a U.S. Department of Education decision to not allow students to use federal aid there.
A few years ago, the two-year college reinstated its football team after a nearly 70-year hiatus in hopes of saving it from mounting debt by increasing enrollment and building excitement. Instead the school was burdened with waves of new students who couldn’t pay their bills and overwhelming football expenses.
About 100 students had been expected to attend Lon Morris this fall, Dawn Ragan, the college’s chief restructuring officer, told The Associated Press.
The college said in the news release that the Education Department would not permit students to use federal aid there because of the bankruptcy filing. Federal statutes disqualify schools that file for bankruptcy.
Ragan said in the news release that the Education Department’s “action to cancel all federal financial aid is justified by bureaucrats merely quoting policy, noting they are powerless to use judgment to provide reasonable or practical accommodations.”
“We understand we would literally need an act of Congress to ensure this does not continue to happen to other schools in the same predicament,” she said in the news release.
The college’s football-based revitalization strategy involved recruiting more than 300 football players for the first season on partial scholarships of $7,500 each, leaving them to pay more than $15,000 in remaining expenses and replenish the school’s coffers. The recruiting helped more than triple the school’s enrollment to about 1,000 students by 2010.
Lon Morris then endured a string of unexpected pitfalls that added to the million-dollar football expansion tab. The campus didn’t have enough room to house the rush of new students, so administrators leased a nearby hotel. It also offered huge tuition discounts to players — as high as 53 percent in 2010 — and failed to collect payments from those who could not pay yet continued to take classes. Other costs, including hiring security to combat reports of misbehaving players, only worsened the financial hole.
Soon the debt was out of control, topping out at more than $20 million, according to court documents, forcing administrators to furlough almost the entire faculty. The president who spearheaded the idea resigned.
The news release said students who had planned on attending Lon Morris in the fall are being notified. Jacksonville College and Tyler Junior College are working to accommodate them.