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Concordia University Portland hired HotChalk in 2009 to build an online Master of Education program and within several years became one of the nation’s largest providers of M.Ed.’s. Graduate student enrollment at CUP increased from 800 students in 2009 to over 6,000 in 2014; over 5,200 were exclusively enrolled in online courses. That same year, CUP paid HotChalk $62.7 million for “recruitment services” on $173.2 million in total revenue.
In 2015, federal prosecutors accused CUP and HotChalk of student recruitment violations and substantially misrepresenting their online programs. The complaint alleged that HotChalk instructed its recruiters to offer prospective students iPads, textbooks, and limited availability “scholarships”, and was paid 75% of tuition for each student it enrolled at CUP. An investigation by The Oregonian found numerous people who claimed to work for CUP and HotChalk simultaneously. CUP and HotChalk agreed to pay $1 million to settle the claims but admitted no wrongdoing, and their business relationship was allowed to continue.
Enrollment in the M.Ed. quickly dropped from its peak in 2014-2015, but then stabilized. At the time of its closure in 2020, interim president Tom Ries said CUP’s total enrollment was about 5,400 students.
Ernesto Dominguez founded the Queer-Straight Alliance as a student at CUP in 2014. Students reported CUP administrators cancelled QSA events, tore down its posters, and pressured the club to change its name. A 2017 CUP Title IX review concluded that “the university was in violation of the student nondiscrimination policy, specifically in relation the [sic] PRIDE club representing our LGBTQ students.”
In the months following, QSA and CUP administrators could not agree on acceptable charter language, and the QSA announced it would shut down. CUP then reversed its stance and said it would approve the QSA charter “as proposed”. CUP also opened an Gender and Sexuality Resource Center in March of 2018 and committed to a series of sex and gender discrimination trainings.
In July of 2018, after serving 35 years as president of CUP, Charles Schlimpert retired and was succeeded by Johnnie Driessner as interim president.[13, 14] The CUP board of regents launched a national search for a permanent successor.
President Schlimpert had originally planned to retire in the summer of 2017 but agreed to extend his tenure after the LCMS asked CUP to consider spinning off as an independent university.
In December 2018, the CUP presidential Search Committee published a list of 25 candidates who had accepted nominations to serve as CUP’s permanent president. At this point, per LCMS bylaws then in effect*, CUP’s board of regents would have submitted a “short list” of candidates to the president of the Concordia University System, who would have then convened a “prior approval panel” to give final authorization on the candidates. Months passed, however, and CUP did not get another permanent president.
On multiple occasions, senior LCMS and CUS administrators spoke candidly about preventing a permanent appointment at CUP until it got its Lutheran Identity Statement in line with the Lutheran Identity Standards adopted at the 2016 LCMS Convention.[19, 20, 21]
At the same time, lower enrollment in online programs combined with the increasingly burdensome revenue-sharing terms in the HotChalk contract were putting the squeeze on CUP financially. It stopped offering degrees in history, English, and biology, but assured students and faculty that it was a part of a strategic reorientation around popular programs like nursing, business administration, and the M.Ed.
These issues all came to a head in November 2019, when at the same meeting in which it orchestrated a $9.2 million rescue of CUP, the LCMS board of directors said it would not again approve any financial assistance until CUP “substantively addressed” the Gender and Sexuality Resource Center on campus.
Closure and fallout
On February 10, 2020, six weeks after coming on as interim president, Tom Ries announced that CUP would close at the end of the spring semester.
Before the end of the day on February 10, a class action lawsuit was filed on behalf of students alleging that CUP collected spring semester tuition under false pretenses. Thousands of students could not complete their degrees, including many who had transferred to CUP following other private university closures in the region.
Two months later, HotChalk Inc. sued CUP for $302 million, alleging fraud and claiming CUP recorded new property deeds giving the LCMS a security interest in the campus days before February 10. In January 2021, a Multnomah County Circuit Court denied CUP’s motion to surrender assets to the Lutheran Church Extension Fund, which had assumed a $9.2 million position in CUP under the authorization of the LCMS board of directors at a November 2019 board meeting. A jury trial is scheduled for October 2021.
Concordia University–St. Paul absorbed CUP’s Accelerated Bachelor of Science in Nursing program. Originally, it made an agreement to take “ownership control” of School of Law in Boise, too, but that deal fell apart in the summer of 2020.
The Oregon Justice Department’s charitable organizations division has opened an investigation into the collapse of CUP, which is ongoing.
In November 2020, online ed company Noodle announced it had acquired “key assets” of HotChalk, including its snappy marketing agency, Creative Communication Associates. HotChalk CEO Rob Wrubel joined Noodle as Chief Marketing Officer.
One day before, the University of Idaho College of Law announced it would take over the lease of CUP’s former law school campus in Boise, which the LCEF acquired with a $4.1 million credit bid in March of 2021. The deal pays the LCEF $600,000 annually–going up every five years–with the option to buy.