Union Institute & University Sued by Students, Graduates Beset by Consequences of Alleged Financial Mismanagement

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Union Institute & University and its president and board of trustees face a proposed class action lawsuit filed by students and recent graduates who claim to be suffering the consequences of the Cincinnati school’s alleged mismanagement of a financial crisis.

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The 41-page lawsuit says Union Institute, a predominately online, private nonprofit institution, has incurred significant revenue losses every year since defendant Karen Schuster Webb was appointed president in 2018, and is now set to permanently close on June 30, 2024. However, reports say that Union Institute “hasn't really been operating” since May 2023, as it canceled last year’s fall semester and turned to teach-out programs at other universities in December.

The complaint alleges the defendants have demonstrated a “reckless” disregard for the rights of students and recent graduates in their attempts to navigate the institute’s financial challenges. For instance, the suit contends, Union Institute continually misrepresented to students that classes would return last fall to keep them from transferring. Students didn’t learn until November 1, 2023 that the institute would not be offering any courses that semester, the filing relays.

According to the proposed class action, Union Institute’s cancellation of the 2023 fall semester has left some students unable to prove their enrollment status with loan servicing agencies, and with loan payments for an education they never received.

Also in November 2023, the U.S. Department of Education (DOE) issued to Union Institute a $4.3 million fine and terminated its Title IV eligibility after finding that the school had allegedly misappropriated federal financial aid funds, the case relays. In a November 7 letter to the school, the DOE claimed Union Institute failed to refund students $753,374 in aid, among several other “brazen misuse[s]” of federal funds, the suit says.

Per the complaint, these funds were due to students between May and August 2023 but were instead used to pay Union Institute’s other debts. According to a report from WCPO.com, some students claim the school used their loan refunds to pay employees, some of whom filed a class action lawsuit against Union Institute in April 2023 over what they said was weeks of unpaid wages.

“Defendants’ unlawful actions not only affect those with federal student loans but also many Plaintiffs with private student loans who did not receive the refund owed to them for loans in excess of tuition,” the lawsuit reads.

The filing goes on to argue that Union Institute’s misrepresentations continued into December 2023, when it established teach-out programs with Ohio’s Antioch University and Lasell University in Massachusetts that it claimed would accept students’ previously earned credits.

“However, many plaintiffs have indicated that is not true,” the suit contends, claiming Union Institute students have been required to retake courses they had already completed. Other plaintiffs say they have been forced to pay out-of-pocket or take out private loans to participate in the teach-out programs due to the status of their loans with Union Institute.

The complaint asserts that several plaintiffs have not received their diplomas following graduation, while others have not received their transcripts despite having requested and paid for them.

Overall, the plaintiffs have missed out on post-graduate job opportunities, been unable to apply to new schools without their transcripts, suffered substantial monetary damages and experienced psychological pain due to the defendants’ negligence, the filing stresses.

“The entire situation defendants have put plaintiffs into has caused severe emotional distress that has many students wondering if they will ever get their degree, if their degree will be worth anything after the DOE investigation concludes, and uncertainty as to where they will finish their educations,” the case states. “Many plaintiffs have been living in agony waiting for what the future might hold for them and their families.”

The lawsuit looks to represent anyone who is or was a student at Union Institute and University from January 1, 2023 to the present who has been adversely affected by the university’s actions that have caused it to be in financial trouble.

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