A federal judge has dismissed a lawsuit by a group of former Mount Ida College students who alleged that they were defrauded by the now-defunct school, winding down the legal battles that have dogged the college a year after its chaotic closure.
US District Court Judge Richard G. Stearns said that the three students who filed the class-action lawsuit had failed to prove that Mount Ida breached its financial duty, misrepresented its financial situation, or violated student privacy laws in the way it handled its closure.
Mount Ida’s publicly available financial documents suggested that the Newton college was struggling for several years, Stearns said in his court decision.
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Stearns added that under Massachusetts law, college officials don’t owe students any fiduciary duty to reveal the institution’s financial woes and said the college had no contract with students.
“Merely paying tuition in exchange for an education does not create a contract,” Stearns said.
Former officials with Mount Ida declared victory Tuesday after Stearns’ ruling, which comes on the heels of Massachusetts Attorney General Maura Healey’s decision in March against suing the school’s leadership for the abrupt closure of the small, private liberal arts campus.
“The decision to close the college while unfortunate was lawful,” said Howard M. Cooper, an attorney who represented former Mount Ida president Barry Brown. “This should be the end of it.”
The college’s former trustees said they were gratified by the court’s ruling and noted that while the school’s closure was a cause for grief, there were good outcomes for many involved.
“Although it does not soften the loss to the Mount Ida community, the postscript to the College’s closure is that more than 90 percent of its students are now continuing their educations at other institutions; most faculty and staff are working in new jobs and all have their retirement benefits intact; the creditors of the college have been paid in full, and the Newton campus — dedicated to higher education for a hundred years — remains a home for higher education,” the trustees said in a written statement.
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The students and their families whose lives were disrupted when they were left scrambling to find new schools when Mount Ida shut down and sold its 75-acre campus to the University of Massachusetts Amherst are disappointed in the decision, said Milton Kerstein, a Wellesley attorney who represented them in the lawsuit.
“For these students and their families, it sends a very tough message,” Kerstein said. They “really wanted to seek redress in courts, so this wouldn’t happen to other students.”
The Mount Ida students alleged in the lawsuit that the closure left them in degree programs that were discontinued, with credits that could not be transferred, and many students lost their scholarships and other forms of financial aid. The students alleged that Mount Ida officials were reassuring them about the school’s future, even as they were aware that the financial condition was more precarious.
Kerstein said these families were still considering their options and haven’t ruled out appealing the decision.
Mount Ida’s shutdown shined a bright light on the struggles of small liberal arts colleges in New England and how disruptive their closings can be to the lives of students.
Mount Ida initially announced last year that it was in merger talks with nearby Lasell College. But that deal fell through in the spring of 2018, and within weeks the college said that it would close in the fall and sell its property to UMass for $75 million, a move Mount Ida officials said was necessary to avoid bankruptcy.
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In the months since Mount Ida’s closure, several other New England colleges have said they will close, including Newbury College in Brookline, whose shutdown has been orderly.
Citing the lessons from Mount Ida, officials at Hampshire College in Western Massachusetts said in January they were seeking a merger partner and trying to shore up the school’s finances.
“It is clear that the Mount Ida closure was done very badly,” said Virginia Sapiro, a professor of political science at Boston University who is writing a book on the history of higher education in the United States, including a section on school closures. “Probably one of the worst examples of the many closures that happen every decade.”
Sapiro said, however, she is not surprised that the judge dismissed the lawsuit because of the legal bar that students had to meet to show a breach of contract and fraud.
Struggling colleges walk a fine line: They must be upfront about their financial situation in documents they submit to state and federal government officials and accrediting agencies, but they don’t want to necessarily advertise their problems for fear of discouraging new students from coming to their school, Sapiro said.
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The Mount Ida case suggests that there should be more oversight of these small, struggling schools by state and accrediting officials, she said.
Families also must do more research, Sapiro said.
“Students and their families should take the decision about where to pursue a degree very seriously, which means learning about the institution,” she said. “Seeking a college education is a big investment of money, time, and a valuable part of one’s life.”
In the wake of Mount Ida’s closing, the state Department of Higher Education has been working on new regulations that will help officials keep tabs on private colleges’ finances. The new system is designed to alert officials sooner to schools that are potentially on the verge of collapse. Governor Charlie Baker has also filed legislation to the same effect.
Bob Hildreth, a former businessman and higher education philanthropist, who said he spent more than $100,000 funding the student lawsuit against Mount Ida, said students remain inadequately protected.
“If Mount Ida can blatantly ignore state regulations and basic consumer protections and still escape accountability, what’s to stop other colleges from doing the exact same thing?” Hildreth said in a statement.
Laura Krantz contributed to this report. Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.