Ed Dept accuses college operator of selling enrollments when shutting down

by Joseph K. Clark

Dive Brief:

  • LAST WEEK, the U.S. Department of Education raised concerns that a college operator closing its locations isn’t giving students enough information about their options to transfer to other institutions or receive student loan discharges.
  • The department outlined the potential issues in a letter to the CEO of the Center for Excellence in Higher Education, or CEHE, a Utah-based nonprofit that ran several colleges but is shutting down operations, The Chronicle of Higher Education reported.
  • CEHE struck an agreement with two universities that allows the college operator to profit if students transfer there, and students are being pressured to attend them, according to the letter.

Dive Insight:

CEHE’s management of Independence University, California College San Diego, and the CollegeAmerica chain has long been fraught. The schools faced several accusations of misleading students and delivering poor student outcomes. The Obama administration’s Department of Education fought against allowing the colleges to convert to nonprofit status, but the department granted the conversion in the Trump era.

The accreditor for CEHE’s colleges said it withdrew Independence University’s accreditation in April because it failed to demonstrate acceptable student outcomes. Last August, the decision came after a Colorado judge ordered the CollegeAmerica chain to pay $3 million for promising students job opportunities and earnings that its programs couldn’t deliver.

Rich Cordray, chief operating officer of the Ed Department’s Federal Student Aid office, said in a statement that the agency had been looking into CEHE since April and was preparing to issue its findings. “CEHE’s decision this week to close its schools appears to have been intended to circumvent the issuance of formal findings by the Department,” Cordray wrote.


According to the Education Department’s letter, CEHE was closing all of its locations by Sunday. Affected students can enroll in another institution that agrees to take them or apply for a closed school loan discharge. This option would forgive their debt if they withdrew during a closure or within a set period before it.

However, the Education Department learned about a concerning arrangement between CEHE and two for-profit schools, South University and the Miami International University of Art and Design.

The department says the terms of the agreement make it appear that students can only transfer to those institutions — an inaccurate representation of their options. Moreover, the department flagged “what appears to be a sale of student enrollments” to the two universities.

“This arrangement, which could position CEHE to profit from student transfers, heightens our concern about students not being advised of all options available to them,” the department wrote in the letter.

The department asked CEHE to provide an updated draft of the notice it will send to impacted students about their options within a day. If the organization doesn’t, the letter said, the department may alert state attorneys general “of potentially unfair, deceptive and abusive acts and practices.”

The Education Department’s Federal Student Aid office emailed affected students explaining their options and making them aware that they could lose their eligibility for a closed school loan discharge if they transferred. CEHE officials did not answer Higher Ed Dive’s emailed questions by publication time Monday.

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