Lon Morris College will suspend the fall semester as it continues to look for a purchaser of the college or a new financial partner.

The college was denied access to federal financial aid funds recently because of the Department of Education’s (DoE) decision not to permit students to use federal aid at the college solely because of its bankruptcy, even though the college has continued to operate and was preparing to open for the fall.

On August 20, 2012, the Bankruptcy Court disagreed with the DoE’s policy, but held it was within their power to terminate financial aid. From the bench, Bankruptcy Judge Parker called the DoE decision a “knee-jerk reaction” and “bad policy”, but he found himself powerless against the DoE regulations. Lon Morris continued to work with the DoE in an effort to have financial aid processed through other means, but ultimately, a timely and workable resolution was not available.

Students previously admitted at Lon Morris for the fall semester are being notified, and Jacksonville College and Tyler Junior College are working to accommodate Lon Morris students in the immediate term.

Lon Morris had experienced financial difficulty for years as the school tried to expand through costly programs and unfunded scholarship aid, and took on almost $20 million in debt to finance its expansion. The Board of Trustees brought in a turnaround firm, Bridgepoint Consulting, in May which promptly cut costs and endeavored to put the school on a path to recovery. Due to pressure from creditors, including threatened termination of utilities and a posted foreclosure, the school sought Chapter 11 bankruptcy protection on July 2, 2012.

Ms. Ragan, the Chief Restructuring Officer of the college, said “The oldest junior college in Texas has been trying to do everything right to preserve an East Texas institution educating students for 158 years. The DoE’s action to cancel all federal financial aid is justified by bureaucrats merely quoting policy, noting they are powerless to use judgment to provide reasonable or practical accommodations. We understand we would literally need an act of Congress to ensure this does not continue to happen to other schools in the same predicament.”

The school intends to continue working with its investment bankers, Capstone, to find a partner.

Students with questions about records or transfers may contact admissions@lonmorris.edu or call 903-589-4000.

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