You probably remember the headlines from back in the day, or maybe you just saw a clip of a heated debate. People talk about it like it was some grand, Ivy League-style campus that just vanished. Honestly, that's the first thing everyone gets wrong. It wasn't a school with a football team and dorms. It was basically a series of hotel ballroom seminars that promised to turn regular people into real estate moguls.
But by 2011, it was gone. Total radio silence.
If you’re wondering why did trump university close, you’ve gotta look past the political noise. It wasn't just one thing. It was a messy pile-up of state regulators breathing down their necks, students feeling like they’d been taken for a ride, and a massive $25 million settlement that finally put the whole thing to bed.
The Name Game That Started the Fire
The trouble actually started almost the second they opened the doors in 2005. You can't just slap the word "University" on a business and call it a day. New York state law is pretty strict about that. To be a university, you need a charter, you need accreditation, and you need to actually, you know, grant degrees.
Trump University did none of that.
As early as 2005, the New York State Department of Education sent a letter to Donald Trump and the "school’s" president, Michael Sexton. They were blunt: Stop using the word University. They argued it was misleading to consumers who thought they were getting a legitimate higher education.
For years, the company basically ignored them. They just kept on rolling. It wasn't until 2010—five years later—that they finally changed the name to the "Trump Entrepreneur Initiative." But by then, the damage was done. The regulators were already digging into the books, and they didn't like what they were seeing.
The "Hand-Picked" Professors That Weren't
One of the biggest selling points in the glossy brochures was that Donald Trump had personally hand-picked the instructors. The marketing made it sound like you were getting the secret sauce directly from the man himself.
"I’m going to have at Trump University the best of the best," he’d say in those infomercials.
When things got to court, it turned out that "hand-picked" was a bit of a stretch. Under oath, it was revealed that Trump hadn't even met many of the instructors, let alone vetted their real estate expertise. Some of them came from backgrounds in sales or retail, not high-stakes property development.
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One instructor even admitted he had never actually met Donald Trump.
This became a huge pillar of the fraud cases. If the main reason people signed up was the promise of Trump’s personal mentorship and "secrets," and he wasn't actually involved in the curriculum, the whole thing started looking like a bait-and-switch.
The "Gold Elite" Upsell and the Playbook
The business model was basically a ladder. It started with a free workshop. Sounds great, right? But those free sessions were mostly just high-pressure sales pitches for a $1,495 three-day seminar.
And once you were at the three-day seminar? The goal was to get you to buy the "Gold Elite" package for $35,000.
Internal documents called "Playbooks" were eventually made public during the lawsuits. They were essentially scripts for the sales team. They gave instructions on how to handle "objections." If a student said they couldn't afford the $35,000, the Playbook told the staff to suggest they "work the room" and look for people with credit cards or even suggest they increase their credit limits to pay for the course.
They called this using "Other People’s Money" (OPM).
It was a brilliant business move in the short term—the company reportedly took in around $40 million—but it’s also exactly why the lawsuits became so aggressive. People weren't just losing a couple of hundred bucks; they were maxing out their life savings on the promise of a mentorship that many felt never materialized.
The Legal Avalanche of 2013
By 2013, the walls were closing in. New York Attorney General Eric Schneiderman filed a $40 million civil suit. He didn't mince words, calling the whole operation a "scam" and a "sham."
At the same time, two separate class-action lawsuits were moving through the federal courts in California. These were led by former students like Tarla Makaeff and Art Cohen. They weren't just looking for refunds; they were alleging racketeering.
The pressure from these three cases is really what killed the business. You can't run a luxury-brand seminar series when your name is tied up in fraud allegations in the two biggest markets in the country. The company effectively stopped enrolling new students in 2010 and 2011 while they tried to fight the legal battle, but the brand was too toxic to relaunch.
Why He Finally Settled for $25 Million
For years, Trump insisted he would never settle. He even launched a website, 98percentapproval.com, to show that most students actually loved the courses. He argued that the lawsuits were politically motivated.
Then, November 2016 happened.
Right after winning the presidential election, the prospect of a sitting president spending weeks in a San Diego courtroom defending a defunct seminar business was a PR nightmare. It was a distraction nobody wanted.
Just days before one of the trials was set to begin, a deal was reached. Trump agreed to pay $25 million to settle all three cases.
- $21 million went to the students in the class-action suits.
- $4 million went to the New York Attorney General’s office.
Crucially, the settlement allowed him to pay the money without admitting any wrongdoing. He still says he would have won at trial, but the check was written, and the case was closed.
What Most People Get Wrong About the Closing
A lot of people think the government just walked in and shut the doors. It was actually more of a slow bleed.
The New York Education Department’s pressure on the name made it hard to market. The 2008 housing market crash didn't help either—selling real estate secrets is a lot harder when the market is on fire. But the primary reason why did trump university close was the sheer weight of the litigation. When your "secret" business model is being picked apart in public court documents, the mystery (and the value) evaporates.
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Actionable Takeaways: How to Protect Yourself
Looking back at the Trump University saga, there are some pretty clear lessons for anyone looking at "get rich quick" seminars today:
- Verify the Word "University": In most states, it is illegal to use this word unless the institution is chartered and accredited. If a "school" isn't accredited by a recognized agency, your credits won't transfer, and your "degree" is just a piece of paper.
- Beware the "Up-Sell" Ladder: If a free or cheap workshop spends more time talking about the "next level" than teaching you actual skills, you are in a sales funnel, not a classroom.
- Check the "Hand-Picked" Claims: If a celebrity is the face of a program, dig into how much they actually designed the curriculum. Often, they just license their name and likeness to a third-party marketing firm.
- Read the Refund Policy Twice: Many students struggled to get their money back because of tiny windows (sometimes just 3 days) to cancel. Always get the refund policy in writing before you swipe a card.
Basically, if someone tells you to max out your credit cards to learn how to make money, run the other direction. Real education usually doesn't require you to gamble your financial future on a three-day weekend.