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Alumni have flocked to Union Institute's now-dormant Facebook page and other online groups claiming they can't get their transcripts.
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Union Institute's Board of Trustees decided to dissolve the university this week after it voluntarily decided to resign its accreditation with the Higher Learning Commission.
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The university remains accredited for now but must provide evidence it has addressed the issues before a June 24 deadline.
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The lawsuit was filed against Union Institute in April 2023 after employees claimed the school had not paid them in over a month and asked them to continue working without pay.
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That means all students attending the university will have to pay out of pocket to stay enrolled.
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On top of the sanction from the Department of Education, the Ohio Department of Commerce's Division of Industrial Compliance is in the middle of investigating Union Institute & University in Walnut Hills.
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The goal of the audit is to find out why Union Institute's finances declined so rapidly in recent years. Since President Karen Schuster Webb began running the school in in 2018, Union Institute has lost money each year, according to tax filings.
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The university usually starts classes in late August, but now it's planning to begin the year Nov. 6.
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Meanwhile, faculty remain unpaid and students are still missing federal loans.
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The faculty council at Union Institute & University in Walnut Hills passed a vote of no confidence in President Karen Schuster Webb and Board of Trustees Chair Edgar Smith Jr. last week following a string of missed paydays and financial trouble in recent months.