CEHE sues Education Department for $500M, alleging agency forced its colleges to close

Higher Ed Dive

Natalie Schwartz

December 6, 2022

Dive Brief: 

• The Center for Excellence in Higher Education, a former college operator whose institutions closed down in 2021, is suing the U.S. Department of Education, alleging the agency forced its institutions to shutter by withholding millions of dollars amid a campaign to close private career colleges.

• CEHE is seeking $500 million in damages related to the closure, including lost revenue and money the organization had to front because regulators placed it on a list of colleges that can’t receive federal financial aid dollars for students in advance.

• The organization alleges the Education Department forced the college to close suddenly so students would qualify for loan discharges. That enabled the Education Department to attempt to recoup those costs from CEHE’s colleges.

Dive Insight:

The lawsuit represents a new front in the battle between the Education Department and for-profit colleges, which have accused the agency of targeting some of their sector’s institutions with restrictions that make it impossible for them to keep operating.

The Education Department did not immediately provide comment when contacted late Tuesday.

CEHE alleges the Education Department bowed to public pressure to force it to close its colleges, which it bought in 2012 when they were for-profit institutions. The Utah-based organization snapped them up with the aim of converting them into nonprofits. The Obama administration blocked the move because, at the time, the colleges’ former owner retained close financial ties with CEHE, The Chronicle of Higher Education reported. 

CEHE sued the department over the decision and reached a settlement with the Trump administration in 2018 that gave its colleges nonprofit status.

However, accusations that CEHE was operating the institutions as nonprofits in name only dogged the organization. It also spent years attempting to fend off allegations that its colleges misled students and that students had poor outcomes.

Those accusations came to a head in 2020, when a Colorado judge ordered one of CEHE’s chains to pay $3 million for allegedly misleading students about the job opportunities and earnings they could expect. An appeals court partly overturned that ruling the next year. 

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