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For-Profit Suit Against Education Dept. Dismissed

November 6, 2018

A federal judge on Monday dismissed a lawsuit brought by a for-profit college chain seeking to assure access to Title IV federal student aid money while it undertakes a financial restructuring.

Education Corporation of America filed the lawsuit against Education Secretary Betsy DeVos and the Education Department last month in the Northern District of Alabama to keep access to federal funds while it pursued a receivership plan. But Judge Abdul Kallon ruled the court did not have jurisdiction in the case.

Besides one phone call in which an Education Department official refused to offer assurance that the plan would be approved, the court found no evidence the receivership plan was ever submitted to the department.

ECA announced in September that it plans to close about a third of its campuses by the end of 2019. Confronted with declining enrollment, the chain has defaulted on payments of its debts and faces claims from multiple creditors and evictions from several campuses. It argued in the lawsuit that without the receivership in place, it may be unable to complete teach-outs of campuses slated for closure.

A spokesman for ECA said Monday that chain was considering other options after the lawsuit's dismissal but didn't provide further comment.

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Andrew Kreighbaum

Andrew Kreighbaum joins Inside Higher Ed as our federal policy reporter. Andrew comes to us from The Investigative Reporting Workshop. He received his master's in data journalism at the University of Missouri, and has interned at USA Today and a national journalism institute in Columbia, MO. Before getting his master's, Andrew spent three years covering government and education at local papers in El Paso, McAllen and Laredo, Texas. He graduated in 2010 from the University of Texas at Austin, where he majored in history and was news editor at The Daily Texan.

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