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Sotheby’s Institute of Art, a for-profit graduate school with campuses in London and New York, has been under one of the US Department of Education’s most serious financial sanctions for nearly two years, according to previously unreported public records.
Since December 2023, the school has been given the “Heightened Cash Monitoring 2” (HCM2) designation, which is used by the DOE when it identifies significant concerns with a school’s finances or compliance practices. Fewer than 50 schools in the country currently hold the status, most of them small religious or cosmetology schools. Under HCM2, a school is barred from receiving federal financial aid in advance and must instead front its own funds and apply for reimbursement. The designation is meant as a warning to prospective and current students that an institution may be at risk of closure.
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SIA was founded by the eponymous auction house in 1969 to train students in the business of art. It offers master’s degrees and certificate programs, with many graduates going on to work at auction houses or other market-oriented companies, or independently as art advisers. Since 2005, however, the school has been owned by the Maryland-based investment firm Cambridge Information Group (CIG) and has retained the Sotheby’s name through a licensing agreement. It is currently operated by BrandEd, a subsidiary of CIG, and has been accredited to confer degrees in New York since 2016. It does so in London through a partnership with the University of Manchester.
The HCM2 designation appears to reflect deeper financial issues at the school. In a separate disclosure from December, which tracked institutions’ financial statuses for fiscal years 2022 and 2023, a DOE review found the school had fallen well below its baseline for what is considered “financial responsibility.”
There have also been warning signs in the UK, where the school operates its London branch. In SIA’s 2024 annual report filed with Companies House, the UK government agency that tracks corporate financial disclosures, independent auditors wrote that the school’s financial statements “give rise to material uncertainty and have the potential to cast significant doubt on the company’s ability to continue as a going concern.”
Also in the filing, the company’s financial statements showed difficulty raising profitability and reducing its accumulated losses. In 2019, SIA generated £8.1 million in revenue and had £8.3 million in costs. While income grew to £9 million in 2023, costs rose alongside it to £9.35 million. That same year, the school reported £4.7 million in accumulated losses—a figure dating to investments made by CIG as it took over SIA in 2005. As of its most recent financial statement, for fiscal year 2024, accumulated losses had been reduced modestly to £4.36 million.
In recent years, financial researchers and journalists have placed greater scrutiny on the sustainability of for-profit schools. In 2023, the Art Institutes, an eight-school network of private for-profit colleges in the U.S., abruptly closed after a decade of financial uncertainty, ownership changes, and declining enrollment. A recent study published by the nonprofit National Bureau of Economic Research found that nearly 40 percent of two-year for-profit schools in the U.S. that opened in the mid-1990s had closed by 2023.
In a statement to ARTnews, Larisa Trainor, counsel for CIG, acknowledged SIA’s HCM2 status but dismissed concerns, saying the company is continuing to invest in SIA and working to restore its standing with the DOE. Trainor added that the federal status was imposed following a period of difficulty during the pandemic. Only 10 percent of students enrolled at SIA use federal financial aid, she said, noting that the HCM2 designation has not affected their ability to receive it.
“We have no concerns about the viability of our graduate programs,” Trainor said.
Still, in the school’s 2023 U.K. filing, CIG was concerned enough to state that it was placing SIA’s business model under “critical review.”
Brandon Busteed, CEO of BrandEd, told ARTnews that the decision to initiate the review stemmed from a need to understand why enrollment fell to a record low in 2021. “Immersive” teaching programs—which give students access to opaque industries like art and luxury—remain a focus of the company, he said.
Busteed, who has overseen BrandEd since 2023, added that there is no impending closure for the school and that CIG intends to operate it indefinitely.
SIA, meanwhile, says its enrollment has rebounded. After dropping to 191 MA students in 2021, the school enrolled 261 students for the 2024–25 academic year—a growth in enrollment of about 2.5 percent per year. That figure is roughly in line with a recent national study on graduate school enrollment, which cited 3.1 percent for public institutions and 2.6 percent for private nonprofits. Still, SIA may be hitting an upper limit: in 2013, the school told the New York Observer that it awarded 300 master’s degrees that year alone.
BrandEd was confident enough to renew SIA’s current 19,000-square-foot lease in Midtown Manhattan for another 10 years in April. But, as the art market undergoes a prolonged contraction, it’s fair to wonder what the future holds for trade schools like SIA.
Joanne Kesten, an art adviser and appraiser who has taught courses at SIA and NYU, told ARTnews that demand for professional degrees focused on the art market has been driven more by perceived value than actual value. She added that the decline of programs like SIA’s had become increasingly apparent in the 2010s. In 2014, NYU discontinued its appraisal certificate program; in 2020, Christie’s Education ended its masters degree programs after 42 years, and now only offers online-only or short in-person courses.
In 2011, SIA quietly closed its Singapore campus—open since 2007—after the school deemed it not “commercially viable.” It cited lower-than-expected enrollment and difficulties meeting the country’s strict higher education standards, according to a separate UK audit from that year.
SIA is also not the first high-profile school to receive the HCM2 designation. In 2018, Howard University was placed on HCM2 following a scandal in its financial aid office. To be removed from the list, the school had to undergo a costly overhaul of its financial aid and accounting systems. At the time, experts told Higher Ed Dive that securing removal from the list can strain institutions that are already struggling.
“Some of these other colleges simply just may not be able to make the changes they need to because they don’t have the resources,” Robert Kelchen, a higher education professor at Seton Hall University, told the publication. “Basically, they’re on the list because they don’t have money, and getting on the list makes it even harder to get off the list.”
