Judge flips ban on Academy of Art Cal Grants

Academy of Art University has won their battle in court to have their disqualification for Cal Grants overturned, according to court documents and a spokesperson for the university.

During a Superior Court hearing Friday afternoon, Judge Peter J. Busch granted the Academy of Art’s petition, essentially finding that CSAC should have used more recent statistics as the basis for revoking the university’s Cal Grant eligibility last  year — even though the more recent data was preliminary and unverified.

The Stephens Institute, doing business as Academy of Art, sued the California Student Aid Commission in August to have eligibility for more than $1 million in Cal Grants restored.

CSAC had earlier disqualified Academy of Art — and scores of other private institutions — over what it alleged was an unacceptably low graduation rate of 29.2 percent.

The list of ineligible institutions published by CSAC — with Academy of Art prominently atop the alphabetical list — shows 2010 graduation rates as the basis for ineligibility.

Academy of Art argued that CSAC should have used its preliminary 2011 graduation rate of 34 percent, rather than 2010’s 29.2 percent.

The regulations were put in place during 2012 to require schools to “keep their graduation rate above 30 percent” and their loan default rate below 15.5 percent to maintain eligibility for Cal Grants.

According to CSAC, Academy of Art’s loan default rate was 10.62 percent in 2008, among the lowest of the institutions shown on the list and well within the state requirements.

In a statement provided to SFBay by an Academy of Art spokesperson, vice president Rebecca Delgado said:

“…as a result of this decision, Academy of Art University students will be able to continue their education with the financial support they were counting on.”

CSAC spokesperson Patti Colston told SFBay the commission did not yet consider the “unsigned” ruling effective, though she confirmed the commission was evaluating where to take things from here:

“We will be consulting with the Attorney General on Monday to consider our next steps.”

In their suit, Academy of Art sought reimbursement of legal fees along with reinstatement of their Cal Grant eligibility.

So, depending upon Judge Busch’s final ruling, the case could end up costing the State hundreds of thousands of dollars worth of Academy of Art’s legal fees.