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On Campus Blog
Alex Friedrich

Lawsuit: Globe/MSB owners got $170 million in student aid in 2011-12

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Here are three documents -- Exhibits A, B and C -- that accompanied yesterday's consumer-fraud lawsuit against Globe University / Minnesota School of Business.

The first two provide some financial context for the suit, which claims that Globe/MSB targeted students who were eligible for a lot of financial aid.

Such aid, the suit says, is the schools' "fundamental source of profits."

(Note: According to May report by the state Office of Higher Education, the schools get about 64 percent of their revenue from federal financial aid, putting in the lower half of Minnesota for-profit schools when it comes to dependence on aid.)

The documents indicate that Globe/MSB, along with several other affiliated schools, brought in about $170 million in student financial-aid revenues during the 2011-12 school year. The suit states that in 2011, Globe received $4.3 million in Minnesota state financial aid.

Globe/MSB are part of the Globe Education Network, which is owned by the family of Terry and Kathryn Myhre of Minnesota. Other network schools include Duluth Business University, Minnesota School of Cosmetology, the Institute of Production and Recording, and Broadview University, which is located in Utah and Idaho.

A quick look suggests that Globe/MSB revenues may have increased since my report on the schools last year.

At that time, I reported that the two schools alone had brought in more than $125 million in financial aid revenue in the 2010-11 school year. The lawsuit's figures for Globe/MSB the 2011-2012 year (Exhibit A above) show that rose to $140 million.

Revenue at the other network schools, however, may have decreased a bit, judging from rough calculations.

Last year in my story, I reported that those schools brought in about $32 million in revenue in the 2010-11 school year. That appears to have slipped to about $30 million (Exhibit B below).

Added together, though, revenues appear to be up: $170 million vs. $157 million.

(I have a call in to Globe/MSB to get confirmation of the numbers.)

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Exhibit C below is the affidavit of former Globe/MSB admissions counselor Hannah Von Bank.

In it, she says a Globe/MSB trainer told her to target veterans and low-income people such as single mothers because of the large amounts of federal financial aid they would bring to the school. She said the school considered that "free money."

Von Bank says in the affidavit that admissions reps were told to sign up prospective students for financial aid "as quickly as possible so the prospective student would not have time to think it over."

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