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Nonprofit College Chain Sues Education Department for $500M

December 8, 2022

A nonprofit operator of several colleges that have since closed is accusing the U.S. Department of Education of waging a hostile campaign against for-profit colleges.

The Center for Excellence in Higher Education, a nonprofit, filed its lawsuit Tuesday in the Federal Court of Claims, seeking $500 million in damages for breach of contract, breach of good faith and illegal taking of funds, among other claims.

CEHE operated College America, Independence University, Stevens-Henager College and California College San Diego—all degree-granting proprietary colleges. The nonprofit sought to convert the colleges from for-profit institutions to nonprofit ones.

“The department and for-profit critics simply refused to let proprietary colleges shed the for-profit stigma they worked so hard to create,” the complaint states. “Rather, they opened their tool chest to wage a near decade long attack on CEHE, forcing its inevitable closure.”

The lawsuit accuses the department of caving to political pressure, failing to honor an escrow agreement and refusing to recognize CEHE’s colleges as nonprofits.

“The Department’s sudden and unexplained deviation from its prior guidance with respect to both the escrow requirements and the College’s nonprofit status created immense and improper burdens on CEHE,” the complaint states.

CEHE also criticizes the department’s decision to put its colleges under heightened cash monitoring status.

“For over a decade, in coordination with ideological confederates, the Department has been on a campaign to cripple and close as many private career colleges as possible,” CEHE acting CEO Eric Juhlin said in a statement. “In 2021, CEHE’s nonprofit colleges became a victim of this campaign. However, CEHE is fighting back, shining a light on the Department’s nefarious tactics and seeking damages for the Department’s illegal actions.”

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Katherine Knott

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