Troubled Michigan Jewish Institute Abruptly Closes Doors After Government Turns Off Cash Spigot
By Sam Kestenbaum March 4, 2016
The federal Department of Education has revoked grant eligibility for a Jewish college that has prospered from millions of dollars in government aid over the years even though almost all its students live in Israel.
The Michigan Jewish Institute suspended most operations Wednesday, citing the federal government’s refusal to re-certify it as a school whose thousands of students can receive Pell grants—a federal aid program designed to help poor students fund their educations that has been MJI’s lifeblood.
In addition to the DOE’s action, which was first reported by Detroit station WXYZ, the Forward has learned that the school’s academic accreditation agency, the Accrediting Council for Independent Colleges and Schools, is also threatening to pull its accreditation. Without this, MJI, located in West Bloomfield, Michigan, a Detroit suburb, would be permanently ineligible for Pell grants.
The school, which is associated with the Chabad-Lubavitch movement, told employees in a March 2 announcement that DOE’s action “has forced us to act immediately since the Department has effectively frozen all financial aid collections.” Citing “uncertainty as to our ability to pay salaries,” the memo informed the employees of their dismissal, “effective immediately.”
The announcement was unsigned, but was sent as an email from Rabbi Yudi Mann, publications director at the Shul, the Chabad synagogue that houses the school. It was then printed out, and distributed to employees at a meeting. A copy of the email was provided to the Forward by an employee.
The school would not confirm its closure to the Forward, or the threat it now faces to its accreditation from ACICS. But it did confirm the DOE action, calling the move “arbitrary and capricious” in a statement. A source familiar with the investigation said that DOE had sent MJI a detailed letter of several pages, received on February 26, explaining the reasons for its action.
“MJI will vigorously contest this unfair action by the government,” the school’s public statement said. In its announcement to employees MJI described DOE’s action as “extremely harmful and unfair to our students, employees and contractors.”
According to a school employee, MJI administrators told staff that 20 people were being dismissed in West Bloomfield and about 100 people were being let go of in Israel.
During a five-year period, MJI’s revenues were sustained by students who claimed $25 million under the Federal Pell Grant Program, which is designed for the neediest American scholars. But in October 2012, the Forward showed how MJI’s assets soared as the college enrolled thousands of students in distance and online learning courses in Israel.
Last July, federal agents raided the school seeking records. According to a source familiar with the federal investigation, DOE officials interviewed about 40 students recorded as being enrolled in MJI and found that a number of them were not “bona fide students.” The Forward was unable to learn how many.
Shortly after DOE notified MJI that its Pell grant eligibility was being revoked, ACICS, the body that had accredited MJI through 2017, sent the school a separate note, warning that it was in danger of having this accreditation stripped away, too.
The ACICS letter advised the school that it would take this action if MJI did not respond in writing or in person within 10 days.
“Unless they show us why we should not withdraw their accreditation,” said Anthony Bieda, vice president of external affairs at ACICS, “that is the action that we’re going to take.”
“People were surprised,” said one employee, who asked to not be named, describing the meeting at which the administrators informed them of their dismissal. “Around 20 people were there—financial aid, the registrar, director of academics, IT—the school said that they were shutting down operations immediately. And then everybody left.”
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