Globe University and Minnesota School of Business will be shuttering their Minnesota campuses, the Woodbury-based schools announced on Tuesday.
The for-profit schools have been cut off from federal funding and were stung by a lawsuit that found they had committed fraud in their criminal justice program.
The schools said they will begin implementing "teach out and articulation agreements" for remaining students to allow them to transfer to other institutions to complete their degrees.
In letters to students and employees and obtained by the Star Tribune, the schools announced that most Minnesota campus workers will be out of work by Dec. 31 and that the schools will shut their doors at the end of January.
Students will need to transfer schools at the end of the current quarter in order to complete their degrees; nursing students, for instance, may be able to transfer to Concordia University in St. Paul.
"This holiday season will not be so happy for the thousands of students forced to complete their programs elsewhere, the hundreds of employees losing their jobs, or the communities that depend on a skilled workforce," the schools said in a statement.
"We will continue to work with regulators to seek more reasonable actions and for our other programs to continue."
Earlier this month, the U.S. Department of Education said the schools, which operate separately but are owned by the same family, no longer will be allowed to participate in federal student aid programs because they knowingly misrepresented the nature of their criminal justice programs and the transferability of earned credits to other institutions.
Without access to federal student loans, the schools struggled to stay afloat.
Separately, a judge had ruled against the schools in a lawsuit brought against them by Minnesota Attorney General Lori Swanson.
Appealing the decision
The Education Department faulted the schools for misleading students. In its decision, the department found that, as far back as 2007, the schools made numerous representations about the ability of students to transfer credits.
It also found that the fraud occurred not just in criminal justice, but in the health sciences, paralegal, accounting, business and massage therapy programs as well.
The schools are appealing the department's decision and are awaiting a final decision from the judge about what sanctions they might face.
"We will continue to fight for our students and colleges until all options have been exhausted," the schools' statement said.
On Monday, U.S. Rep. Tom Emmer, R-Minn., sent a letter to Education Secretary John King Jr. questioning the department's actions and suggesting it was deliberately timed before a new Republican administration takes over.
Emmer demanded answers from the department, including whether students have been told that the decision can be quickly rescinded; what alternatives were considered short of cutting off federal funds; and what sort of taxpayer liability might be incurred by student loans that would be forgiven.
"The recent decision by the Obama administration has left more than a thousand students with an uncertain future as to how they will finish the degrees for which they've been working so hard," Emmer said in a statement.
Some classes will continue to be offered online at the Minnesota School of Business campus in Blaine for students who do not rely on federal funding and who can complete their program in the winter or spring quarters, according to a letter from the schools.
The schools had 19 campuses in Minnesota, Wisconsin and South Dakota that enrolled more than 4,500 students in 2015. They have since closed several Minnesota campuses and consolidated others as the fraud trial began.
About 1,700 Minnesota students were enrolled in the schools as of September.