Proper student transitioning is paramount when a higher education institution is on a path to reducing its academic offerings or closing its doors. The Trustees and Officers must assure that there is adequate time to plan and execute an enrolled-student transition to alternate programs, a process known as a Teachout.

The abrupt closing or reduction of academic offerings by an educational institution without an orderly student transition plan can create personal financial and occupational liabilities for Trustees and Officers either financially penalizing or blocking them from future higher education employment. Such actions can result in lawsuits from tenured professors or students, Closed School Discharge liabilities, and the permanent loss of Title IV funding. The same abrupt closing or reduction can also impact lender recoveries and collateral values.

To minimize or avoid those exposures, an institution must plan for students’ transitions to other programs so each student can complete their education and receive their certificate or degree. Planning and executing a student transition is a complex process that includes a multitude of legal and operational obstacles and is best completed with the guidance and support of external legal and operational professionals.

In a Teachout, the closing institution (“Closing Institution”) stops accepting new students and arranges for its students to complete their courses of study at one or more “Receiving Institutions”, preferably nearby comparable institutions or on-line. A Receiving Institution agrees to accept all the credits earned by transitioning students toward a reasonably similar certificate or degree and is willing to award that certificate or degree in approximately the same amount of time the student would have needed at the Closing Institution.

A Closing Institution must notify every accrediting agency which is engaged in the Closing Institution’s oversight. All federally recognized accreditors require every accredited Closing Institution to submit for review and earn approval of its provisional Teachout plan. Each Teachout plan must include:

  • Teachout agreement(s) with Receiving Institution(s).
  • A commitment to teaching a specific list of students who are currently enrolled in programs at the Closing Institution.
  • A commitment to assuming the education responsibilities of the identified students, without compensation from any outside party, for the remainder of a current semester if the Closing Institution terminates operations.

A Teachout plan can also impact the distribution of federal financial aid. For a Closing Institution to maximize the remaining aid it can receive for the benefit of its students, the Closing Institution also needs to notify and negotiate with its specialized accreditors, state higher education authorities, relevant state licensing boards, the US Department of Education, and other relevant regulatory bodies.

Receiving Institutions must meet certain criteria to be authorized to participate in a Teachout plan, including:

  • Adequate experience and resources to deliver the required services
  • Capacity to continue meeting existing student obligations
  • Comparable accredited academic programs
  • Sufficient access to academic programs without students being required to relocate or incur burdensome travel
  • A clear statement of tuitions and fees
  • A willingness to waive admission and residency requirements to Teachout students

Most important is a willingness to prepare and execute a Teachout plan. The Closing and Receiving Institutions must establish cross-functional teams including, but not limited to registrar, financial aid, admissions, academic affairs, student affairs, communications, public relations, information technology, and human resources.

Similar to other merger or divestiture integration plans, the Teachout plan must have a map that clearly illustrates how current students can complete their degrees. The map is the foundation of the Teachout plan and informs whether new courses need to be developed and/or accredited at the Receiving Institution, which and how many faculty and staff are required, and the magnitude of resources required to execute the plan. In addition to these primary issues, a Teachout plan needs to address secondary issues including, but not limited to disposition and safekeeping of student transcripts, financial aid records, health records, and historic archives.

Successfully planning and executing a Teachout plan requires sophisticated legal and operational expertise, significant time, resources, and open and frequent communication with outside professionals, lenders, students, faculty, accrediting agencies, state higher education authorities, donors, alumni, the local community, the Closing Institution, and the Receiving Institution(s). Institutions should be willing to reach out to an array of education, restructuring, and other legal advisors, as well as operational advisors to successfully design, negotiate, and execute their Teachout plans.

For more information contact any member of the Getzler Henrich Education Team: Bob Kuhn, Ed Phillips, Mark Podgainy or Bert Weil