SAN JOSE -- Only four years after a private college chain bought National Hispanic University in San Jose, the struggling campus has stopped new enrollments, stunning students, faculty and community leaders who had hoped the school would become a powerhouse in Latino education not just in the United States but also worldwide.
"The reality is we're in a very difficult financial situation," said NHU President Gladys Ato.
Ato described the admissions moratorium as a "responsible" action as officials ponder the next move. For now, she said, the university will focus on serving about 600 students currently enrolled at the school.
"We want them to know they're not going to be alone," Ato said.
However, the NHU president and officials at Laureate Education Inc., a for-profit corporation that purchased NHU in April 2010, are keeping the financial numbers and future plans to themselves. Laureate would only say they've invested "tens of millions" in NHU. Their reluctance to publicly talk about their options has opened a floodgate of fears that the East Side institution will close its doors for good or become just an online diploma mill.
"What's next?" asked Victor Garza, a Latino community leader who has supported the university since its founding in 1981 in Oakland. The college moved to San Jose in 1990. "They are talking like the patient who has body pains but won't tell you where it hurts."
Ato expects NHU's board and Laureate to announce their plans within two months. She has held two "town hall meetings" with students and parents and plans another for Saturday morning. But her explanations of the school's financial predicament and the admissions moratorium have left some students wondering about the quality of education even if NHU remains open until they graduate.
One of the more vocal students, Alejandra Valladares, said she was attracted to NHU by its emphasis on Latino-themed courses, leadership training and the promotion of racial and ethnic pride on a campus that also includes many white, Asian and Native American students.
"The values of the school stood out for me," the junior in child development said. "Now it comes down to dollar bills."
Baltimore-based Laureate has 75 schools in 30 countries and about 800,000 students, making it the largest for-profit U.S. college company by enrollment. Valued at about $4 billion, Laureate has invested heavily in campuses in Asia, Europe and Latin America. The company has hired former President Bill Clinton as a globe-trotting pitchman.
Laureate bought NHU for an undisclosed amount in 2010 after the fledgling college in East San Jose gave up on its long and frustrating campaign to woo Silicon Valley contributors and Latino philanthropists.
Back then, Laureate's plans for introducing Internet classes at NHU seemed to mesh with the college's ambition. The company had hoped to add 8,000 students online and start degree programs in Mexican-American studies and Spanish.
"That goal was never met," Ato said. "We were very, very far from reaching it."
The school suffered another setback in spring 2013 when the U.S. Department of Education withdrew financial aid for students enrolled in the campus's liberal arts program. At the time, the federal government was pulling back such support for degree programs that did not offer good prospects for employment.
Ato said one-fourth of NHU's students were affected and had to change their majors or transfer out. As a result, she added, the school dismantled liberal arts and ended hopes for Spanish and Mexican-American studies.
When Laureate bought NHU it also acquired the school's accreditation, a hard-to-earn status granted in 2002 by the Western Association of Schools and Colleges. One fear, Valladares and Garza said, is that Laureate would close its San Jose campus and transfer the accreditation to an Internet-only version of NHU.
Ato and Laureate spokeswoman Tamara Chumley declined to comment on that possibility. Valladares said it would be enough to drive many Latino students currently enrolled out of the school and likely to pricier or crowded state or community colleges.
"Online education doesn't work for Latinos," she said. "It doesn't work for them because they haven't been prepared with the computer skills that are required."
The Western Association of Schools and Colleges said it would watch what Laureate did with NHU because for-profit education companies at the time were gobbling up nonprofit, accredited schools. In some cases, the online schools enrolled thousands of unqualified students and profited by keeping the tuition and financial aid money after the students dropped out.
Mary Ellen Petrisko, a WASC division chief, said the group was aware of NHU's problems but declined to speak about them in detail.
"All I can say is that we're working closely with them," Petrisko said.
Garza said giving up on NHU's lofty goals or shutting it down would be a shame.
"It's pride," he said. "A lot of other cities said they would love to have the National Hispanic University."
Contact Joe Rodriguez at 408-920-5767 and follow him on Twitter.com/JoeRodMercury.