Indian university withdraws from plan to buy 2 US campuses

In this Monday, Oct. 3, 2016 photo shrubs rest near The New England Institute of Art, in Brookline. (AP Photo/Collin Binkley)

BOSTON – After facing scrutiny from state officials in Massachusetts, a chain of colleges based in India has canceled its plans to buy two U.S. for-profit colleges.

The Amity University chain filed paperwork in July proposing to buy the New England Institute of Art, located near Boston, and the Art Institute of New York, which are now owned by the Pittsburgh-based Education Management Corp. The deal would have helped Amity gain a foothold in the U.S. amid the chain's global expansion.

But Education Management Corp. officials said Tuesday that Amity has withdrawn from the proposed sale. Anne Dean, a spokeswoman for the corporation, would not say why the deal fell through. Officials from Amity, which is based in New Delhi, did not immediately respond to requests seeking comment.

The sale would have required approval from state officials in Massachusetts, but some had said they were skeptical of the chain, saying it had no track record in the U.S.

In September, the state's Department of Higher Education sent a letter to the New England Institute of Art asking what steps had been taken to ensure that Amity would provide a quality education and whether the chain had the finances to support it. Department officials said they didn't receive a formal response and hadn't been notified that the sale was canceled.

The school proposed the sale after it had made plans to close following years of steep enrollment and revenue declines. In 2014, it enrolled 500 students, down from 1,600 in 2009.

Maura Healey, the state's attorney general, said Tuesday that the sale was a "bad idea from the beginning," describing Amity as a "foreign entity with no experience in American higher education."

"These students deserve the education and careers that they were promised," Healey said in a statement. "They don't deserve to be treated like a source of income and shunted aside when they are no longer profitable."

Amity has already bought a campus on Long Island in New York, which is intended to become the chain's first U.S. branch. The company paid $22 million in September to buy the 170-acre site from St. John's University in New York City, which was selling its Long Island branch campus and shifting to a smaller location.

The Amity chain has spread rapidly from India in recent years, opening campuses in England, China, South Africa and five other countries. Aseem Chauhan, one of the chain's chancellors, said in an interview last month that he hoped a U.S. campus would be popular among international students seeking an American education.

Dozens of U.S. colleges have opened overseas campuses, but few foreign schools have sought to establish branches in the United States. Some experts say that may be changing, though, as more for-profit colleges look for buyers amid dwindling enrollments and increasing regulation from the federal government.

The Santa Fe University of Art and Design, a for-profit college in New Mexico, announced this year that it was being bought by the Singapore-based firm Raffles, which operates 30 colleges in more than a dozen countries.

Before colleges that receive federal funding can be sold, their buyers must gain approval from the state government, the U.S. Department of Education and from an accrediting agency, according to federal education officials.