January 13, 2025

Education Department Cancels Debts for Students Who Attended Disgraced CEHE Schools

At the start of President Biden’s last week in office, U.S. Department of Education Miguel Cardona this morning announced a new student debt relief package that includes automatic debt cancellation for 73,600 borrowers who attended any school owned by the Utah-based Center for Excellence in Higher Education between 2006 and the school chain’s collapse in 2021. CEHE, which converted from for-profit to non-profit in a troubling 2012 deal that allowed owner Carl Barney to keep making millions off students and taxpayers, operated CollegeAmerica, Stevens-Henager College, Independence University, and California College San Diego.

The CEHE schools, which operated both on campus and online, repeatedly engaged in deceptive and predatory recruiting and lending for its high-priced and often poor-quality programs. Eventually, Colorado’s attorney general took CollegeAmerica to court, and a judge there found the school liable for extensive consumer protection violations. The schools’ accreditor then acted to remove its approval, and the Department of Education halted the flow of taxpayer-funded student aid.

The Department said today that the debt relief amounted to $1.15 billion for the former CEHE students.  It added in a statement that the decision was “based on findings that CEHE engaged in widespread and pervasive misrepresentations related to salaries, employment prospects, and its private loan product.” The Department had last year granted relief to students who had attended the CollegeAmerica campus in Colorado.

On a call with reporters this morning, Cardona announced the CEHE relief, and relief for some students who attended two other for-profit schools, Drake College of Business in New Jersey and two Massachusetts campuses of Lincoln Technical Institute. The steps, which Cardona described as relief for students “whose schools engaged in misconduct,” were part of a larger package of student debt relief announcements today that also covered $465 million for 6,100 borrowers through the Public Service Loan Forgiveness program and $2.5 billion for 61,000 borrowers who have total and permanent disabilities.

White House Domestic Policy Council director Neera Tanden underscored on the call that the purpose of the administration’s student debt relief initiative is “making college more affordable” and thus boosting America’s economy.

In a written statement today, President Biden said, “I promised to ensure higher education is a ticket to the middle class, not a barrier to opportunity, and I’m proud to say we have forgiven more student loan debt than any other administration in history.”

An administration spokesperson on the call declined to say whether today’s announcement was the last debt relief action that the Biden administration will take.

Officials on the call did make clear that today’s actions are “final agency determinations” that cannot be cancelled by a successor administration.  The point is not a technicality; in the first Trump administration, Secretary of Education Betsy DeVos staffed up the senior ranks of her department with former for-profit college executives and lobbyists and reversed efforts to protect students and taxpayers from predatory college abuses.

Perhaps hoping for a reprise of those DeVos policies, the man behind CEHE, the ultra-wealthy Carl Barney, donated $924,600 to Trump’s election effort last year.  (DeVos, who had resigned and criticized Trump in 2021 after the January 6 assault on the Capitol, also donated to Trump — $250,000 — in 2024, as part of a more than $1 billion donation from her family.)

Like Trump, who in 2016 paid $25 million to settle civil charges by New York’s attorney general that his unaccredited real estate school, Trump University, defrauded its students, Barney saw his schools shut down after law enforcement agencies and former students went to court over claims of deceptive practices.

Barney wrote on his blog in September that he likes that Trump “wants to work with Elon Musk to reduce spending, regulations, waste, and fraud in the federal government. ”

Of course, if Trump, Musk, and Barney really wanted to reduce waste and fraud, they would oppose federal aid to colleges, like Barney’s, that leave many students worse off than when they enrolled, buried in debt and without the career advancement they sought. And particularly college operations like Barney’s CEHE, which received more than a billion dollars in federal taxpayer funds and ultimately was found liable for deceiving students — and also converted to tax-free non-profit status in a deal that increased Barney’s staggering wealth.

A Trump administration serious about fighting waste, fraud, and abuse would also use its authority to go after CEHE to recoup all the money from federal student loans that the Department cancelled out today. Because CEHE’s abuses are well-documented, and severe.

In August 2020, following an extensive trial, a Colorado state court sided with that state’s attorney general and found CEHE,  CollegeAmerica school, Carl Barney, and CEHE CEO Eric Juhlin liable for deceptive practices and awarded a $3 million judgment. The Colorado court found that Barney’s schools used a detailed playbook to manipulate vulnerable students into enrolling in high-priced, low-quality programs; that the schools directed admissions representatives to “enroll every student,” regardless of whether the student would likely graduate; that the schools’ recruiters and advertisements greatly overstated starting salaries that graduates could earn; and that the schools falsely inflated graduation rates.

(CEHE and the Colorado attorney general’s office were back in the state trial court in Denver last fall, after high-priced lawyers for Barney pursued an appeal to the Colorado Supreme Court that resulted in an order requiring the trial judge to make some additional findings.)

In April 2021, Independence’s accreditor, ACCSC, ended its approval of the school, which by then was CEHE’s main school, effectively repealing its eligibility for federal student grants and loans. Soon after, the U.S. Department of Education restricted the flow of such aid. In the wake of those developments, CEHE shut down classes and laid off most staff.

Although its schools are shuttered, CEHE still faces additional legal challenges. The U.S. Justice Department is moving ahead with a long-pending lawsuit in which it has joined whistleblowers in pursuing False Claims Act fraud charges against the schools. The federal Consumer Financial Protection Bureau has pursued a separate investigation into CEHE’s private loan practices.

CEHE, despite the probes, bad publicity, and collapse of its schools, has continued trying to collect the high-interest private loan debt it created for its broke former students.

CEHE has portrayed itself as a victim of a political conspiracy against it, with ongoing vitriol on Twitter from former CEO Eric Juhlin, whom the Department of Education took the rare step of suspending from federal contracting. More attacks on CEHE critics, and the Colorado attorney general office and court, have come from Barney.

Barney has charged on his grievance-heavy blog that the case brought by the Colorado AG against his schools is a “horror story of government corruption,” and “a multi-agency collusion to put schools out of business” — a supposed plot that involved not only a senior assistant Colorado attorney general, but also the executive director of accreditor ACCSC, officials of the U.S. Department of Eduction, and “the cabal of progressive haters of private colleges (David Halperin, Robert Shireman, entities funded by Arnold Ventures, Sen. Elizabeth Warren, and Sen. Richard Durbin).”

In December 2022, CEHE took its grievance campaign to a new low by suing the United States government for $500 million in the U.S. Court of Claims, asserting, as a press release statement by Juhlin contended, that the Department of Education “in coordination with ideological confederates… has been on a campaign to cripple and close as many private career colleges as possible” and that CEHE’s schools were “a victim of this campaign.”

The Department of Education’s two other automatic debt relief actions today also concerned for-profit schools.

The Department granted $107 million in relief to 11,000 borrowers who attended any location of now-shuttered, New Jersey-based Drake College of Business from 2008 through the school’s closure in July 2015.  According to today’s press release, “Investigations by the Department found that Drake extensively recruited at homeless shelters and other temporary housing facilities and lied to borrowers about the promise of ‘free stipends’ that were actually student loans. Drake also misrepresented the assistance in borrowers obtaining externships and the job placement it provided.”

And the Department granted $1.4 million in debt relief to 280 borrowers who attended the criminal justice program at Lincoln Technical Institute’s Lowell, Massachusetts, campus from 2010 to 2012 or the Somerville, Massachusetts, campus from 2010 to 2013. The Department found, based upon evidence provided by the Massachusetts attorney general, that that Lincoln Tech misled criminal justice students at those campuses about its job placement rates.  Lincoln Tech is still in business.

The Department said that eligible CEHE, Drake, and Lincoln Tech borrowers will get debt relief automatically, regardless of whether they have submitted a borrower defense to repayment application. The Department says it will email the borrowers informing them of the automatically loan discharges “in the coming days.”

The Department also said that last week it emailed all borrowers previously approved for school-wide group discharges “with a letter reaffirming their entitlement to a full discharge of their remaining balances and a refund of payments” to the Department.  “The email,” the Department added in its press release, “was sent to borrowers whose loans have been fully discharged as well as those that are still in process. Borrowers will also receive a case number, making it easier for them to provide proof of their approval.”