When Nicole Williams arrived at the Art Institute of Philadelphia on Tuesday for a meeting about financial aid for the interior design program she planned to attend in the fall, school officials handed her a letter, meant for students scheduled to start this month, saying that the session had been canceled.

"We regret to inform you that your July class start date is not available due to an insufficient number of enrolled students," the letter read.

Between 75 and 80 students were expected to start classes Monday, significantly short of the institution's goal of around 100, according to a former Art Institute admissions representative who said she was among 12 in the department laid off Monday.

As recently as last week, management was pushing the admissions staff hard to meet the goal for the July class, according to the former employee, who declined to be named for fear of jeopardizing possible severance.

Then, on Thursday, the Art Institute sent official notice to city and state officials that the school at 1622 Chestnut St. would close on Aug. 28 and that all 171 employees would be out of work by the end of the year.

"This came as a shock," said Fred Wright, president of District Council 47 of AFSCME, whose Local 3397 represents about 60 faculty members at the Art Institute. The members ratified a new three-year contract last month, Wright said.

A student who came out of the building Tuesday said school officials had assured her that she would be able to finish her degree next summer as scheduled. Federal student financial aid regulations require higher education institutions to provide a way for existing students to finish their programs.

Officials at the Art Institute referred all questions to Anne Dean, spokeswoman for Dream Center Education Holdings LLC, an Arizona nonprofit that acquired the Art Institute of Philadelphia in January. Dean did not respond to emails or messages left on voicemail requesting clarification.

On June 21, the Middle States Commission on Higher Education postponed a decision on the Art Institute of Philadelphia's accreditation, citing concerns that the school was not in compliance with requirements related to planning, financial resources, and institutional improvement.

The Philadelphia-based commission, which says on its website that the Art Institute has more than 1,000 students, has just started communicating with the Art Institute on the latest developments, spokesman Brian Kirschner said.