Sylvan Learning Systems Inc., which operates universities around the world, has stopped classes at its startup engineering college in India because the regulatory environment is "in a state of chaos," an official with the Baltimore company said yesterday.
John K. Hoey, Sylvan's senior vice president of corporate operations, said 55 students had completed one semester at South Asia International Institute in December when the company put the college on hold.
Sylvan estimated the cost of starting the institution and refunding students' tuition at less than $2 million.
"It's not material at all to our financials," said Chris Symanoskie, director of investor relations and corporate communications. "It's a small investment to have a presence in that market."
Sylvan's stock closed at $30.76 yesterday, down 24 cents.
The school is a minor part of Sylvan's for-profit operations, though the company continues to have big hopes for India.
The company has 101,000 students in colleges in Latin America and Europe, in addition to 16,000 students studying through online institutions in the United States.
Hoey said Sylvan sought accreditation for South Asia International Institute before classes began in August, expecting to obtain it well before students finished the bachelor's degree program.
But an initially positive reception from regulators soured as the political climate worsened for private higher education institutions, particularly those run by foreigners, he said.
Key regulatory bodies issued new, contradictory rules, and a Supreme Court decision in the fall required all tuition rates to be approved by local judges, Hoey said.
"It was very clear to me that while they were not going to reject our application, they were going to sit on it for the foreseeable future, and that really is an untenable situation to put our students in," he said.
Sylvan refunded the semester's tuition to students, gave each a one-year scholarship for use elsewhere and worked out transfer agreements with three other institutions, he said.
The company owns 125 acres in the southern city of Hyderabad, on which it intended to build a campus, but the students had attended classes in rented space.
Hoey said the company considers South Asia International Institute in a state of suspension rather than closed because it intends to try again when the situation changes.
"We still have a lot of great expectations for India over time," he said. "It's just going to be a matter of how and when."
Sylvan typically acquires universities in other countries rather than starting anew but sees India as a market that cannot be ignored.
"It's a country that exports more students to the United States than any other country in the world," Hoey said. "Once the regulatory environment stabilizes ... and we believe it will, if you're engaged in the business of international higher education, then you want to be in India."