Saint Augustine’s Declares Bankruptcy but Won’t Close

Saint Augustine’s University filed for bankruptcy Tuesday, a move that university officials say is necessary to address its “current financial realities” and chart a path forward for long-term sustainability.

The North Carolina university owes more than $14 million to the Internal Revenue Service and $8 million to other federal agencies, according to court records. Over all, SAU said it owes somewhere between $50 million and $100 million and estimates that it has more than 200 but fewer than 1,000 creditors. The university has $100 million to $500 million in assets, the bankruptcy filing shows.

The embattled historically Black private university has struggled to stay afloat for years, fighting to remain accredited as enrollment cratered and it faced complaints from lenders, governments and vendors about missed payments. Officials say the university isn’t closing and they plan to continue offering certificate and noncredit programs while the bankruptcy process continues. (Filing for bankruptcy means that the university will automatically lose access to federal financial aid.)

Saint Augustine’s will carry on without accreditation, which it’s been battling over in court. The Southern Association of Colleges and Schools Commission on Colleges stripped the university of accredited status in December 2024 because of failure to comply with governance and financial standards. That decision marked the second time in two years that SAU lost accreditation, but in both cases, the university was able to secure a court order to regain its status. The most recent court order allowed SAU to remain open for the 2025–26 academic year while litigation continued.

According to a university news release, terminating litigation at this time represents a prudent use of resources, the board determined. Officials said in an FAQ about the bankruptcy decision that some of the university’s financial challenges stemmed from accreditation-related costs.

“My guess is that they spent a lot of money fighting about accreditation, and it came to a point where they just could not do that anymore,” said Robert Kelchen, chair of educational leadership and policy studies at the University of Tennessee at Knoxville. “If they couldn’t maintain accreditation and if they have any hope of operating at all, bankruptcy could be the best option. It’s not a good option, but it’s their best option if they have any hope of operating, because that can help pare back some of their liabilities.”

SAU will officially become unaccredited May 15, so any degrees conferred before then will be valid. (Commencement exercises are currently scheduled for May 9.) Current students will need to finish their degree programs elsewhere, and the university is supporting them via teach-out agreements. The university didn’t say Tuesday how many students are currently enrolled. Before losing its accreditation for the second time in December 2024, the university had 175 students, according to federal data. That’s down from more than 1,000 in 2020.

SAU’s primary lender, Self-Help Ventures Fund, is providing support during the bankruptcy, which university officials say demonstrates “confidence in the university’s future.” The FAQ didn’t say whether layoffs are likely, but noted that “the board is currently reviewing every aspect of the institution to create an optimal reorganization plan.”

The university’s interim president, Jennie Ward-Robinson, is stepping down as part of the transition. Verjanis A. Peoples, who was the acting provost and vice president of academic affairs, will lead SAU as interim.

“These steps position the university to move forward with clarity and purpose, continuing its mission of preparing students academically, socially, and spiritually for leadership in a complex, diverse, and rapidly changing world,” officials said in the release.

Next Steps for SAU

To move the university forward after bankruptcy, the SAU board says it’s developing a “robust” as well as “comprehensive and forward-looking” plan. No further specifics were provided Tuesday, though the FAQ says, “This plan will be shared with stakeholders at an appropriate time.”

In the meantime, the university is planning to develop nondegree certificates and apprenticeship programs. A banner on its website Tuesday advertised its noncredit offerings. Ultimately, the university wants to build “a pathway toward reaccreditation.”

But that process will likely take years and will be hard to sustain without federal financial aid, said Kelchen.

“They can try to become accredited in the future, but at this point, I’m not aware of any institution that has been able to go through bankruptcy and get financial aid access back,” he said.

SAU could run online programs with skeleton staff, he said, noting that Knoxville College lost accreditation 30 years ago and still offers some online classes.

Kelchen said bankruptcies in higher ed are “extraordinarily rare; that’s usually when you just close.” In 2024 Bacone College in Oklahoma filed for bankruptcy, and it then was forced to liquidate its assets a year later.

“It can give you a path to manage all of your liabilities,” he said. “Like in the corporate world, it can help to clear the books some and give you a path forward to operating. The challenge in the higher education context is that provision that bans the institution from receiving federal financial aid.”

Kelchen added that while bankruptcy could help to reduce some of SAU’s debt, it’s not clear whether the university can lower it enough and bring in sufficient revenue to sustain the operation.

Amid the uncertainty, Kelchen said, the SAU board is opting to remain open likely because they want to continue operating and the alumni don’t want them to give it up.

“And that’s where they end up in this bit of a state of suspended animation where they’re still operational and they may do a little bit, but they’re not able to offer a full undergraduate education in the way that they used to,” he said. “We’ve seen multiple cases over the years of if an institution tries to close, alumni will step up. They’ll try to sue. They’ll raise a big public fight because they think hope is possible even when the finances strongly suggest hope is not likely.”