Dade Medical College, the homegrown for-profit school that rose from humble origins to become an educational juggernaut, announced Friday it is closing its doors, effective at the end of the day.
Majority owner Ernesto Perez issued an afternoon memo informing employees and students.
Perez once wielded enormous political power both locally and in Tallahassee. But amid heightened federal scrutiny and mounting debts, he was unable to keep his college from going out of business.
All six Dade Medical campuses, stretching from Homestead to Jacksonville, are affected. Also closing are the two campuses of Dade Medical’s smaller affiliate school, the University of Southernmost Florida.
“Since the school’s opening in 1999, Dade Medical College contributed to the community through the training of thousands of Nursing and Allied Healthcare workers that graduated and are working in their field,” Perez wrote in his memo, adding “I, for one, will definitely miss working alongside you and witnessing all the positive outcomes we’ve built together.”
Some former Dade Medical students don’t consider their outcomes positive. They accuse the school of selling an overpriced, poor-quality education. And Dade Medical’s graduates have low passage rates for license exams in nursing and physical therapy assistants — the 2014 nursing passage rate at the Hollywood campus was 13 percent.
The bad news for Perez is likely to continue. As early as next week, he is expected to be arrested in connection with alleged campaign finance violations, multiple knowledgeable sources told the Herald. Perez also remains under criminal investigation for financial irregularities involving student loans.
Perez is a high school dropout and onetime rock musician who saw his colleges as an educational alternative for students who might not prosper at a traditional institution.
He made powerful friends along the way. Dade Medical has contributed more than $170,000 to state and federal candidates, through Perez’s companies, relatives and employees at various affiliated firms. Nearly a dozen South Florida politicians were either put on the college payroll or hired on a contractual basis.
A recent Miami Herald series, Higher-Ed Hustle, showed how Florida’s for-profit college sector used extensive political ties to fuel its growth. Nearly one in five Florida students attend a for-profit school, and the Florida Legislature has passed at least 15 laws that helped the industry grow — sometimes by stifling the growth of public community colleges, which generally deliver better results at a much cheaper cost to students.
Last month, auditors with the U.S. Department of Education paid a surprise visit to Perez’s schools. The result: federal regulators slowed down the flow of financial aid money to Dade Medical and USMF. With Perez’s empire already on shaky ground financially, that action by regulators may have been the decisive blow.
In the past three years, Dade Medical received more than $100 million in taxpayer-funded Pell grants and student loans, according to college financial statements. Almost 90 percent of company revenues came from taxpayers.
State Sen. Rene Garcia, a Hialeah Republican, worked for Dade Medical until a couple of months ago. He earned $134,399 a year as a senior vice president of governmental and community relations, and said Friday he was shocked by the closing.
“I’m blown away by it, to be honest with you,” Garcia said. “I had no idea.”
Garcia said he sympathized with the roughly 2,000 students and 400 employees who were left hanging by the shutdown, but Garcia said he doesn’t regret working at Dade Medical.
“We educated a lot of students and we changed students’ lives,” Garcia said. “I’m not going to sit here and bad-mouth an institution that I worked for for seven years.”
Marium Martinez, 25, attended both Dade Medical and its sister school, USMF. Martinez, who dropped out in April, owes about $28,000 in student loans. Martinez said she withdrew from the nursing program because the quality of education was inferior, and teachers couldn’t explain the reasons why certain medical procedures are required.
Her student email still worked Friday afternoon, and Martinez received Perez’s farewell note to students and the staff. When she spoke to a Herald reporter, she was crying — tears of joy, she said, that the college is finally shuttered.
“Thank God, these horrible people,” Martinez said. Of Perez, she said, “He seriously thought that this was OK and it’s not. You’re crushing people’s dreams.”
News of the college’s closing stunned students at Dade Medical’s Miami Lakes campus, who attended classes as usual Friday and said none of the employees told them that a shutdown was coming. They got the news from a Herald reporter.
“I have a test on Tuesday, that’s all I know,” said Karen Rodriguez, 26. “Maybe not.”
Students in navy scrubs filed out of the college's Coral Gables corporate headquarters in a daze. A few cried and hugged as an employee tried to reassure them. A few made plans to drink at nearby bars.
Some students said they were informed in an email at 5 p.m. that Dade Medical was shutting its doors. Others learned through word of mouth.
“We lost everything,” said Sonia Villegas, 40. “We lost time. We lost money. We lost a lot of things.”
Some students were only weeks away from sitting for license exams in their career field. Jennifer Reynaldo said she was set to graduate in six months. The single mother quit her job to enroll and took out tens of thousands of dollars in loans to pay tuition.
“What am I going to do now?” she asked.
Perez's father, Ernesto Perez Sr., lugged a cardboard box full of belongings from the office to his white Buick.
“I don't have any answers,” he said. “Something happened, and we had to close.”
Perez Sr. defended his son and the college. He said the college enrolls everyone — even recent immigrants who may be learning English. He said those student demographics, and the fact that many students work and have families, contributed to the school’s low passage rates on license exams.
“We do a lot for this community,” he said. “The people we handle are minorities — real minorities”
Mirta Perez, Ernesto's mother, cried at the thought of her son's fate.
“My son is a great man,” she said through tears. “He has been ruined.”
Company financial records show that the Perez family — father, mother and son — all collected salaries from the school. Majority owner Ernesto Perez earned $431,999. His father, listed as a “consultant-finance,” earned $197,760. His mother was listed simply as a consultant, and earned $28,634.
The college operator’s wife, Sylvia, also took a salary of $28,634. Her job title in company records: “Corporate Director of Ball Busting.”
In recent weeks, there were several signs that the college’s finances were unraveling.
Among those signs: a $4.6 million court judgment imposed against Dade Medical in a federal lawsuit over student loans, an announcement that the school would eliminate its signature nursing associate’s degree program at three campuses and an internal email indicating that the school’s most recent paychecks had bounced.
Additionally, the U.S. Department of Education, following its surprise visit to Perez’s schools last month, placed the campuses on “heightened cash monitoring” status. Instead of immediately receiving a semester’s worth of loans and Pell grants for each student enrolled, Dade Medical would have to absorb its up-front teaching costs itself, and then ask the feds for reimbursement.
Surviving that way requires a college to have considerable cash reserves. Dade Medical didn’t.
On Friday, college employees, some of them tearful, were told to apply for unemployment immediately.
For the past two years, Perez’s two colleges had been dogged by news reports, mostly in the Miami Herald, questioning their business practices and highlighting the poor results achieved by students. For example, Dade Medical charges $40,050 for a physical therapy assistant associate’s degree, but the program is unaccredited, and only 36 percent of graduates this year have passed the required license exam.
Florida is the only state that permits unaccredited physical therapy assistant programs, and the law that allows them was sprearheaded in 2013 by a Dade Medical ally. Miami Republican Rep. Carlos Trujillo, whose sister-in-law received free tuition, the Herald reported.
It was a testament to Perez’s political power that Florida passed such an unusual law. Perez then enrolled hundreds of students in the unaccredited program — boosting college revenues by millions of dollars.
But federal regulations specify that only graduates of accredited physical therapy assistant programs can bill Medicare or Medicaid patients. In a retiree state like Florida, that means Dade Medical graduates can’t work with a large pool of patients, and several hospitals have told the Herald that they would never hire these graduates.
Some Dade Medical physical therapy students say the school deceived them about what accreditation means when they enrolled. Karen Rodriguez, the Miami Lakes student, said Dade Medical told her the only downside about an unaccredited program is you’re limited to working in Florida.
On Friday, six months after she enrolled, and on the last day her school was in business, a Herald reporter told her about the Medicare and Medicaid restrictions.
“It is very unfair that they weren’t straight up at the beginning,” Rodriguez said. “Just be straight up. That’s not right at all.”
Miami Herald staff writers David Ovalle and Patricia Mazzei contributed to this report.
WHAT HAPPENS NEXT
For current Dade Medical students, the Florida Department of Education said Friday that it is “working with the school to transition students to others schools in the area offering the same programs.”
Instead of finishing their Dade Medical education at another for-profit school — a process known as a “teach out” — students can also seek loan forgiveness from the U.S. Department of Education. Students who are attending a college that closes (or who dropped out of the shuttered school within the past 120 days) can ask for their federal loans to be forgiven.
Once they apply, the approval is generally automatic. More information can be found at http://1.usa.gov/1Q0qmwi.
Getting the loan forgiveness requires Dade Medical students to walk away from the credits that they earned at the school. But many traditional colleges won’t accept those credits anyway.