In August, the U.S. Department of Education revoked Lon Morris College's Title IV status, permanently stripping LMC's access to Higher Education Act fundingincluding federal Pell grants, teacher education assistance, SMART grants, work study and federal student loans, the Jacksonville (Texas) Daily Progress reported yesterday. Having already started bankruptcy proceedings, the Lon Morris College estate closed the college's doors. But could the funding loss have been avoided? Accounts in LMC's proposed liquidation plan filed in federal bankruptcy court indicate that Chief Restructuring Officer Dawn Ragan was under the impression she could both declare bankruptcy AND keep the college's Title IV status. The plan also indicates Ragan started entertaining the idea of bankruptcy almost as soon as she was hired as CROmonths before the U.S. Department of Education felt it necessary to intervene. "The law is awfully clear: If you declare bankruptcy, you are out of the Title IV program," said Dennis M. Cariello of New York City. "Bankruptcy simply is not an option if you hope to continue operating as a school." LMC attorneys struggled against the order, characterizing the department of education's revocation as "illegal" under the Bankruptcy Code. Ultimately, Judge Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas upheld the U.S. Department of Education's ruling.
