NTS trade school shuts down, files for bankruptcy U.S. had acted to restrict funds over irregularities

September 28, 1990|By Patricia Meisol

The state's largest for-profit trade school has gone belly up, leaving at least 2,000 students stranded and the U.S. Department of Education facing a potential bill of $7.8 million.

National Training Systems Inc. filed for protection from creditors under federal bankruptcy laws last week after closing its truck driving and office-computer technology training schools in Baltimore, Glen Burnie and Laurel.

NTS had been the subject of complaints by students and the target of state charges that it offered unapproved courses and violated other rules.

The school has enrolled tens of thousands of students in its combination study-by-mail and residential courses in truck driving and diesel mechanics during the last two decades, and branched out into computer and office technology in the 1980s. Last year it was the single largest borrower of federally guaranteed loans after the University of Maryland at Baltimore, but many students dropped out and defaulted on their federal loans.

NTS had a default rate of 51.2 percent in 1987 and 28.7 percent in 1988.

In June, the U.S. Department of Education notified NTS that it would withhold tuition money from the school until after students graduated and the school documented that it had followed the rules. Usually, schools get tuition money up front for training students.

NTS President Charles R. Longo did not return a phone message yesterday. Alan Grochal, the attorney handling the NTS bankruptcy, said the school's cash-flow was severely restricted by the federal government's decision three months ago to withhold money from the school.

The company listed $8.6 million in liabilities and $885,000 in assets, in bankruptcy papers filed Sept. 21. Like many profit-making trade schools, NTS depended heavily on federal money for its income.

By law, the school must refund the full tuition to students who were enrolled when it closed or help them complete their education in another school.

Maryland Higher Education Secretary Shaila R. Aery said yesterday that her office would help place students in other schools and refund tuition from a new fund set up for that purpose with contributions from trade school owners this year. Tuition ranged from $3,000 to $5,000.

State officials said that as many as 2,000 students were enrolled in NTS, many of them in home study programs.

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