Fueled by Pell Grants, a Chabad College Booms

It was the first week of the new semester at Michigan Jewish Institute, a college of more than 2,000 students, nestled in the leafy Detroit suburb of West Bloomfield. But at 3 p.m. on Wednesday, the classrooms were silent and the entrance to the college’s temporary home, an impressive $6 million brick-and-glass synagogue with a vaulted roof that soars 50 feet into the sky, was desolate.

That’s because in less than a decade, MJI has transformed itself from a small campus-based college into a burgeoning online university, thanks in large part to more than $25 million in federal aid, designated for low-income students, which the not-for-profit school has received over the past five years.

But very little of this money has been spent on men and women taking courses in Michigan or, indeed, in the United States. Instead, the majority of MJI’s students can be found working toward an MJI degree in Judaic studies at yeshivas and seminaries overseas, mostly in Israel.

In a September 13 interview in a classroom at MJI, which is based at a magnificent Chabad synagogue called The Shul, Dov Stein, director of academic administration, said that MJI’s enrollment had grown this year to 3,000 students from only 300 students in 2004. In a subsequent email, Stein revised the figure down to just over 2,000 students.

As MJI has expanded rapidly, it has drawn increasingly on the Federal Pell Grant Program, the government’s largest education aid program targeting low-income students, which funnels public funds directly to the school. At the same time, MJI’s net income has soared. According to the institute’s most recent available tax records, between 2006 and 2010 inclusive, MJI’s net income increased to $850,000 from $89,000 — a staggering 860% five-year jump. The school ended 2010 with almost $3 million in assets. So far this calendar year, the school has received $8.7 million in federal aid.

But its academic record is poor. As the number of students has risen, performance on national proficiency exams has plummeted. Student retention has suffered, too. Data compiled by the U.S. Department of Education showed that only 9% of the students who began their studies in 2010 as freshmen returned in 2011 as sophomores. According to the same data, MJI awarded only three bachelor’s degrees in 2011.

This, despite MJI’s best efforts to help students complete their studies quickly by taking classes online while simultaneously learning at Israel-based yeshivas, from which they also earn credit.

At a time when studies show the poverty rate growing among America’s ultra-Orthodox communities, MJI’s potential impact on its target audience — young Jewish men and women, many from religiously observant homes — could be profound. But school officials could provide little evidence that MJI’s graduates are finding jobs or going on to receive higher degrees.

Nonetheless, Stein insisted that MJI is positioned to grow larger still. “We could easily surpass 10,000 students actively pursuing a degree,” he said.

Thanks, in large measure, to the American taxpayer.

Michigan Jewish Institute was founded by Chabad-Lubavitch of Michigan in 1994 as a college catering mainly to Russian-speaking immigrants who needed to convert Soviet university degrees into something more recognizable to American employers.

Its first president was an Englishman, Chaim Dovid Kagan, who has five degrees, including a doctorate in physics from Imperial College, London. At the time, MJI offered vocational degrees specializing in business and computers. Yet even during the mid to late 1990s, some of MJI’s students enrolled in year-abroad programs.

Kagan, who left MJI in 2003, said many of those students used their affiliation with MJI to get financial aid for their year abroad and then did not return to MJI to complete their studies. As the number of overseas students rose, the college’s retention rate grew worse. “I knew a lot of people were only doing this [enrolling in MJI while abroad] to get the [financial] help and therefore there was a retention issue,” Kagan said. “It was inevitable that a lot of people would drop out.”

Kagan stressed that from the outset, MJI’s emphasis was on providing a “means and a Jewish environment to give job training, hence degrees in bachelors of applied sciences and in computing and business.” Study abroad was a side issue, so Kagan limited the number of year-abroad students to 120. “Otherwise,” he said, “retention would have been killed.”

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