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August 24, 2012

Lon Morris suspends fall semester

Palestine Herald-Press

JACKSONVILLE — The folowing is a press release from Dawn Ragan, chief restructuring offcer with Bridgepoint Consulting, which was hired to help Lon Morris through its financial troubles. It has not been edited by the Palestine Herald-Press:

 

JACKSONVILLE – Lon Morris College will suspend the fall semester as it continues to look for a purchaser of the college or a new financial partner.  

The college was denied access to federal  financial aid funds recently because of the Department of Education’s decision not to permit  students to use federal aid at the college solely because of its bankruptcy, even though the college  has continued to operate and was preparing to open for the fall.   

 On Aug. 20, the Bankruptcy Court disagreed with the DoE’s policy, but held it was within their power to terminate financial aid.  

From the bench, Bankruptcy Judge Parker called the DoE  decision a “knee-jerk reaction” and “bad policy,” but he found himself powerless against the DoE regulations.  

Lon Morris continued to work with the DoE in an effort to have financial aid processed through other means, but ultimately, a timely and workable resolution was not available.    

 Students previously admitted at Lon Morris for the fall semester are being notified, and Jacksonville College and Tyler Junior College are working to accommodate Lon Morris students in  the immediate term.   

Lon Morris had experienced financial difficulty for years as the school tried to expand through  costly programs and unfunded scholarship aid, and took on almost $20 million in debt to finance its expansion. The Board of Trustees brought in a turnaround firm, Bridgepoint Consulting, in May  which promptly cut costs and endeavored to put the school on a path to recovery.  Due to pressure  from creditors, including threatened termination of utilities and a posted foreclosure, the school  sought Chapter 11 bankruptcy protection on July 2.  

“The oldest junior college in Texas  has been trying to do everything right to preserve an East Texas institution educating students for  158 years. The DoE’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,” Chief Restructuring Officer Dawn Ragan said. “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.”   

 The school intends to continue working with its investment bankers, Capstone, to find a partner.   

 Students with questions about records or transfers may contact admissions@lonmorris.edu or call 903-589-4000.

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