Arturo Santos Jr., 33, enjoyed working with his mom, Patty Galdamez, who owned and operated Guti Beauty Academy since 2002. Run by the mother-and-son team, Guti offered new career opportunities to its student body of approximately 80.
After Galdamez died in a car accident in North Carolina, Santos and his sister’s lives were turned upside down.
Santos, Guti’s president and executive director, regrettably announced to students on Aug. 29 that they’d have to continue their education elsewhere. Two students contacted the Bradenton Herald immediately after the closure with concerns for themselves and other students who attended the school.
“The students are saying they don’t know what to do,” said Alejandra Santos, 28, Galdamez’s daughter.
She was teaching English in Brazil when she heard of her mother’s passing and returned to help her brother with funeral arrangements and to determine Guti’s future.
The U.S. Department of Education responded to the Bradenton Herald’s inquiry about Guti in an email on Sept. 1.
“The Department has not been officially notified of the institution’s closure,” said the email, sent by DOE spokesman Alberto “Al” Betancourt. “We are in the process of contacting the school to try and confirm this and any student notifications that may have occurred.”
Arturo Santos said in an email to the Herald that he sent notification of Guti’s closure to the DOE on Sept. 7 and “not earlier as we were completing the Teach Out Process by which students can continue toward completion of their academic/career goals at another institution.”
The Department of Education did not respond to multiple requests for comment beyond the Sept. 1 email.
In January, Galdamez was notified of the Department of Education’s decision to remove Guti from some Title IV loan programs, Arturo Santos said. The Code of Federal Regulations specifies that a school’s students lose access to Federal Family Education Loans and Direct Loans if more than 40 percent of a previous class defaults on its loans.
“Ours was 41.7 percent,” Arturo Santos said. “And the way the DOE compiles the 41.7 percent is inaccurate.”
88 percent of Guti students were at or below the poverty line
Arturo Santos said he applied for an exemption but didn’t submit the application within the Department of Education’s specified 30-day time frame, so it was rejected. More than 88 percent of Guti students are at or below the poverty level, Santos said, so he wanted to apply for the economic disadvantage exception.
“It doesn’t change the number of students who defaulted but it would change the punishment for Guti of taking away the loan program,” Arturo Santos said.
He and Galdamez attempted to take action to prevent students from defaulting on loans. Guti contracted with a separate company to call and remind students to pay loans, Arturo Santos said.
Arturo Santos reached out to local congressmen, including Reps. Vern Buchanan and Dennis Ross and Sens. Bill Nelson and Marco Rubio. He wasn’t satisfied with the responses he received, which touted what the legislators have done in their efforts to improve general post-secondary education policies and procedures but had no response and no information relevant to Guti’s situation.
“It’s like (the legislators) operate in this weird vortex,” Arturo Santos said. “It’s not the real world. If you make up scenarios in your head and draw it out on spreadsheets, it’s different in real life. It affects a lot of lives.”
While grieving his mother and making arrangements for her services in August, Arturo Santos said he notified the Florida Commission of Independent Education and Guti’s credit agency of Galdamez’s death. Days later, he received news that Guti was placed under the Department of Education’s Heightened Cash Monitoring 2 program because of “uncertain ownership.”
The HCM2 payment method is used “to provide additional oversight of cash management,” according to the DOE website. Arturo Santos said in reality, the HCM2 designation just extends the already-arduous process for students to obtain Pell grants. Arturo Santos is the executor of his mother’s estate, and as such, he doesn’t understand why he can’t be trusted to run the school as it was before Galdamez’s death.
After the HCM2 designation, Arturo Santos said Buchanan provided another option.
“Congressman Buchanan’s office suggested I open a new case for the (HCM2) decision based on mom’s passing,” Arturo Santos said in an email. “All the while, it’s damage already done.”
It’s like (the legislators) operate in this weird vortex. It’s not the real world. If you make up scenarios in your head and draw it out on spreadsheets, it’s different in real life. It affects a lot of lives.
Arturo Santos Jr., president and executive director of Guti Beauty Academy
ITT Technical Institute recently shuttered its 130 U.S. campuses, saying last week it couldn’t survive recent sanctions by DOE.
In a letter to more than 35,000 students, the Indiana-based parent company ITT Educational Services announced that campuses won’t open for the fall term that was scheduled to begin Sept. 12 — leaving students scrambling for last-minute options since many U.S. colleges already have started fall classes. ITT also cut more than 8,000 jobs.
The chain was banned Aug. 25 from enrolling new students who used federal financial aid, because, Education Department officials said, the company had become a risk to students and taxpayers. The department also ordered ITT to pay $152 million within 30 days to help cover student refunds and other liabilities if the chain closed.
The Santoses have reached out to attorney Ron Holt of Kansas-based Douthit Frets Rouse Gentile & Rhodes, LLC, for guidance. In an email exchange between Holt and Chris Miller, DOE Director of the Atlanta School Participation Division, Miller explains why the DOE chose to use the HCM2 designation for Guti.
“Without seeing the owner’s will or knowing what was planned for the institution the Department really doesn’t know where the ownership is going or who had the legal authority to direct the school,” Miller said in the email. “We had one of these that’s taken about 8 years to go through the Probate process so it can be hard to determine.”
Holt attempted to explain to Miller that Galdamez only had a living will and “thus died intestate. Consequently, there is no dispositive will to send you.”
Miller responded with conviction of the DOE’s decisions. Holt said in an email to the Herald that DOE guidance on situations like the one “is deficient in at least two respects.”
“First, with respect to what is considered to be a ‘change in control’ of an institution and the point in time when a ‘change in control’ event is deemed to have occurred,” Holt said in the email. “Second, apart from the confusion about when a ‘transfer’ occurs, the DOE guidance adds confusion as to whether and when any reporting needs to occur with the death of a family shareholder where the decedent’s equity interest will be transferred to a family member.”
Because of the HCM2 designation, Holt told the Santoses that Guti likely would not receive any Title IV funding until the middle of October at the earliest. Guti cannot provide tuition assistance to students without the Title IV funding. And without financial aid, most Guti students can’t afford to attend.
The Santoses said they are heartbroken they had to close their mother’s dream. But they’re trying to see the light at the end of the tunnel, if not for themselves, for former Guti students.
“I’m thankful other schools will take our students,” Arturo Santos said.
The Associated Press contributed to this story.
What Guti taught
Guti Beauty Academy offered education tracks to students to obtain the following diplomas:
- Basic cosmetology
- Facial specialist
- Full specialist
- Manicure specialist
- Massage therapy
- Teacher training
Source: Florida Commission for Independent Education document provided by Arturo Santos Jr.