Accountability for CEHE College Chain Is Long Overdue
Late last week, as we were the first to report, college overseer ACCSC terminated the accreditation of online career college Independence University, the main school now operated by the non-profit Center for Excellence in Higher Education (CEHE), and the U.S. Department of Education suspended from federal contracting Eric Juhlin, CEHE’s CEO.
These were positive developments, but they are long, long overdue. And the Department, the accreditor, and other authorities still haven’t come close to righting the wrongs against students and taxpayers delivered by CEHE, Juhlin, and the chain’s ultra-wealthy founder, Carl Barney, over more than a decade.
It was back in August 2020 that Colorado trial judge Ross Buchanan issued a devastating $3 million judgment against CEHE, Barney, and Juhlin, and a 160-page opinion meticulously documenting how Barney’s schools used a detailed playbook to manipulate vulnerable students into enrolling in high-priced, low-quality programs; how the school directed admissions representatives to “enroll every student,” regardless of whether the student would likely graduate; how the schools’ recruiters and advertisements greatly overstated starting salaries that graduates could earn; how the schools falsely inflated graduation rates.
It was back in October 2020, in the wake of the Colorado decision, that eighteen organizations, and I, petitioned the Department of Education to cut off federal aid to the CEHE schools, citing federal law requiring that action for schools and executives found responsible for fraud, and a month later when Senators Dick Durbin (D-IL), Sherrod Brown (D-OH), and Michael Bennet (D-CO) called on the Department to do the same.
It was back in 2017 when Colorado’s attorney general office presented at trial the powerful evidence on which Judge Buchanan’s decision was based — and when someone supportive of CEHE published an outrageous attack on the Colorado assistant attorney general prosecuting the case.
It was back in 2014 that the Colorado attorney general, Republican John Suthers, filed the lawsuit, with a 34-page complaint outlining abuses at CEHE’s schools.
It was back in 2013 when two former CEHE employees filed a whistleblower lawsuit against CEHE, alleging that the company’s schools paid illegal commissions to recruiters for signing up new students, in violation of the Department of Education’s incentive compensation ban. And it was back in 2014 when the U.S. Justice Department, having reviewed the whistleblower evidence, ratified those claims by filing its own complaint and joining the lawsuit. After years of delays, that case has still not gone to trial.
It was further back, in early 2013, that we wrote on this website about the troubling conversion of Carl Barney’s schools from for-profit to non-profit, amid records of high student loan default rates and signs that the schools were continuing to engage in practices characteristic of for-profit colleges. We cited a letter that one employee wrote to authorities alleging a lack of standards and integrity in the school’s recruiting: “Our admission representatives are required to enroll anyone and everyone. All entrance and diagnostic testing has been eliminated… Toothless and homeless people are not marketable and will never pay back student loans. We still enroll them…. Our director said, ‘Get 40 people and I don’t care what you say or do to get them.’”
We also raised in 2013 concerns that the CEHE conversion and other conversions of for-profit schools to non-profit would allow predatory colleges to avoid the regulations and stigma that their bad behavior created, while continuing to allow the prior owners to make big money.
It was back in 2015 that the New York Times wrote about such concerns surrounding CEHE, noting that Carl Barney stood to make big money off the conversion by means of a $431 million loan for the sale of the schools he previously owned, rent payments from the new non-profit, and a tax deductible loan to the non-profit for millions more.
It was also back in 2015 that the Century Foundation’s Robert Shireman, a former top Department of Education official, published a powerful analysis of this issue, detailing the abuses inherent in the CEHE conversion and coining the phrase “covert for-profit” to capture the nature of this fraud on students and taxpayers.
It was back in 2016 when the Obama administration rejected CEHE’s application to be treated as a non-profit for purposes of Department regulations, with then-Education Secretary John B. King Jr., finding that the conversion benefited Carl Barney, not students, and warning, “This should send a clear message to anyone who thinks converting to non-profit status is a way to avoid oversight while hanging onto the financial benefits: Don’t waste your time.” Trump anti-student education secretary Betsy DeVos, whose top higher education aide Diane Jones once served as a paid consultant to CEHE, secretly reversed that decision in late 2018.
It was back in 2019 that, as we reported, the federal Consumer Financial Protection Bureau, charged with protecting against abuses of private student loans, began investigating CEHE.
It was last year that we published new reports, based on accounts from CEHE staff, about predatory recruiting and poor quality instruction at the company’s schools. More whistleblowers inside the company are now ready to talk to investigators.
And it was way back in 2012 that accreditor ACCSC began expressing concerns about a range of practice and performance concerns at CEHE schools, resulting in institution of probation status in 2018.
It was 2013 when former CEHE campus director Debbi Potts complained to ACCSC about abuses at the schools, and 2016 when Potts filed a lawsuit alleging numerous violations. And it was in 2019, after CEHE countersued Potts for blowing the whistle, that a Colorado jury, agreeing that Potts may have technically violated her nondisclosure agreement by talking with a former colleague, sent a message to CEHE about what they really thought by awarding the company total damages of one dollar.
In short, it has been about a decade since the egregious abuses of Carl Barney’s colleges started to get exposed, and they have been exposed over and over, and brought to the attention of the Department of Education and other authorities numerous times.
Yet millions and millions of federal aid dollars have continued to flow into the CEHE schools — Independence University, CollegeAmerica, Stevens-Henager, California College San Diego — in the years since. CEHE reported $259 million in 2019 revenue, and averaged around $200 million in revenue per year from 2012 to 2018, most of it from taxpayer-funded student aid. Thousands of students — single mothers, veterans, immigrants, people struggling to build better futures — have enrolled and put in time, many getting substandard educations and no career advancement, and many graduates and dropouts alike left with overwhelming debt.
(People who worked on the Senate HELP committee staff during its landmark 2010-2012 investigation, under then-chairman Tom Harkin (D-IA), of for-profit colleges, say the Barney schools were never on their radar, even though by 2012, CEHE, in its second year operating the schools, brought in $216 million in revenue. The Harkin probe produced detailed examinations of 30 for-profit school chains, but there were, and are, many more predatory school operations hiding in plain sight.)
CEHE paid Eric Juhlin $740,000 in 2019 to run the non-profit CEHE schools. Carl Barney, who celebrates his wealth and demands that his money buys influence in his areas of interest (like Ayn Rand philosophy organizations), has amassed hundreds of millions of dollars from operating these schools and selling them to CEHE.
And even now, the Department of Education, along with the Department of Veterans Affairs and the Department of Defense, have not acted to finally cut off federal aid to the CEHE schools, even though there are now two independent reasons the education department is required by law to do so: the Colorado court verdict and the termination of accreditation. CEHE is exercising its rights to appeal all these outcomes, and until those appeals are resolved, measures against the schools are not final.
But the accreditor action and the Department move against Juhlin, and a possible next step, as we have urged, to suspend CEHE from federal aid, could practically mean the end for Carl Barney’s schools, which already have stopped enrolling students, according to a Juhlin email we obtained, and told recruiters they have the next week off work, an Independence recruiter told me last night.
If this is really the end for the Barney schools, there will be serious and regrettable disruption and hardship for staff, teachers, and students spread across the country. The Department of Education, VA, Pentagon, and state agencies will have a tough road ahead helping the displaced students find new opportunities.
Hopefully the Department will get serious about federal student loan relief for current and past ripped-off CEHE students, as well as students scammed by other predatory schools.
There also should be greater personal accountability for Barney, Juhlin, and other executives and investors who profited so richly from the CEHE scam.
For far too long, through Democratic and Republican administrations, the Department of Education, and accreditors, have generally protected the interests of colleges, who can mobilize armies of aggressive lawyers and lobbyists, over those of students and taxpayers, with the Department demanding a mountain of proof before disadvantaging a school, despite ongoing harms to others. Joe Biden’s campaign website seemed to promise a flip to that script, pledging that the new administration would “require for-profits to first prove their value to the U.S. Department of Education before gaining eligibility for federal aid.” The Biden administration should fulfill that promise, moving to protect students against CEHE once and for all, and using its authorities to take decisive action on other predatory chains — such as Perdoceo and IEC — that are continuing to deceive, enroll, and abuse students at taxpayer expense.