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333 South Kansas Street

Edwardsville IL 62025

Phone: 618-656-2593
Fax: 618-656-2594

August 16, 2016

For Immediate Release.

Edwardsville, Illinois, August 16, 2016. The management of Alvareitas College of Cosmetology
(Alvareitas), a two-generation, family-owned beauty school, which for several decades has operated
three campuses in Southern Illinois in Belleville, Edwardsville and Godfrey, announces that it is challenging
actions taken by the U.S. Department of Education (ED) over the past 18 months that are threatening to
drive the Alvareitas schools out of business.
Alvareitas was founded, owned and managed by businesswoman Alvareita Giles, with various family
members helping to run the business, including her daughter Sheila Fudge serving as director of the
Belleville campus and her cousin Judith Grigg serving as director of the Godfrey campus. Ms. Giles passed
away suddenly on August 4, 2013, but her family members have continued to operate the Alvareitas
schools since that time. Ms. Giles company stock has been held in a family trust, over which Ms. Fudge
has been serving as successor trustee. Ms. Giles intention, set out in the trust, was for her stock to be
distributed among her family members, but a legal battle with the ED has prevented that from happening
to date.
Within a couple of weeks of Ms. Giles death, Ms. Fudge placed phone calls to the Private Business &
Vocational Schools Division of the Illinois Board of Higher Education (the Illinois Board), the schools
accrediting body, the National Accrediting Commission for Career Arts & Sciences (the NACCAS), and the
ED, to inform them of her mothers death. Since Ms. Giles shares remained in trust to be passed on
eventually to her family members, Ms. Fudge and other family members thought this was all they needed
to do. Unfortunately, the government regulators saw it differently but did not share that opinion until
more than a year had passed.
Despite Ms. Fudges phone calls, more than a year later both the NACCAS and the ED informed Alvareitas
that it should have made a formal report within weeks of Ms. Giles death. NACCAS imposed a $57,000
fine on the schools and made them apply for renewal of their accreditation with proof that the Illinois
Board had approved the schools operating with Ms. Giles family members running operations all of
which was done to the satisfaction of NACCAS.

The EDs position was far worse and more punitive in nature in early 2015 the ED cut off the schools
access to federal student loans and grants, needed by over 80% of the schools students to pay tuition,
and announced that the schools would not regain loans and grants unless they repaid all aid funds
disbursed to students after Ms. Giles death, an amount which the ED indicated it would eventually
determine. Given that most students need federal aid, the schools stopped enrolling new students. But to
allow existing students to finish their programs, the schools continued to operate with a leaner staff and
with family members sacrificing compensation and contributing around $250,000 of personal savings to
pay operating expenses.

This spring the ED announced that the schools must repay over $650,000 and until they do so they will not
be able to apply to have federal aid restored. Yesterday, Alvareitas filed a brief in an administrative appeal
which demonstrates that the governments actions are contrary to federal laws and regulations and asks
an Administrative Law Judge to overturn the EDs actions and require it to restore federal student aid to
the schools. Given the typical time involved in an appeal process of this nature, there may not be any
ruling until the holiday season has arrived.
The Alvareitas schools have a strong track record of both serving students aspiring to beauty careers and
complying with regulatory standards. Over the past several years, on average more than 60% of the
schools students have completed their programs, over 90% of the graduates have passed their licensing
exams and over 50% of these licensed professionals have obtained jobs in the beauty industry. Even more
impressive are the schools loan default rates the rate at which graduates and withdrawn students meet
their loan obligations over a three year period. Over the past 3 years, the official default rates for the
Alvareitas schools have ranged between 6.2% and 15.1%, which means an overwhelming majority of the
schools students are completing their education, getting jobs and paying back their loans outcomes
which the federal government has said define a quality educational institution.
But this high quality family owned institution that has prepared hundreds of students for beauty careers
may not be around much longer. Already Alvareitas has found it necessary to close its Belleville campus,
and the two other campuses are clinging to a day to day existence with only a handful of students. Ms.
Giles family members and other remaining staff at the schools remain hopeful that justice will prevail in
their appeal and gravely flawed actions of the ED will soon be overturned.
For more information, contact Sheila Fudge at (618) 656-2593 or or the schools
attorney Ron Holt at (816) 292-7600 or