CEHE Demands Reconsideration Due to Flawed Interpretation of Law, Disregard for Precedent, and Political Motive

Question: When is an IRS-approved nonprofit not a nonprofit? Answer: When the Department of Education says so.

Yesterday, Center for Excellence in Higher Education, Inc. (“CEHE”), a respected tax exempt 501(c)(3) corporation, submitted a Request for Reconsideration of the U.S. Department of Education’s (the “Department”) decision that CEHE’s Colleges are for-profit institutions for purposes of federal financial aid. The reconsideration confirms that the Department’s determination misapplies its own regulations, ignores and is unsupported by facts, and disregards legal precedent to improperly advance a political agenda.

“CEHE believes in the rule of law and that federal agencies must make objective decisions that adhere to statutory provisions, legal precedent, and the plain language of applicable regulations. Every organization in this country has a moral obligation to challenge agency decisions that fail to do so,” said Eric Juhlin, CEHE’s CEO.

CEHE calls out the Department for inappropriately sending a copy of its decision to the media (along with an inflammatory press release) before providing the decision to CEHE. CEHE believes that the Department’s decision was, “…based upon advancing a political agenda and not on an unbiased application of law and regulation.”

The Department took 44 months to issue a decision on CEHE’s change of ownership applications. During that time, CEHE operated as a nonprofit and, among other things, had independent audits performed as a nonprofit entity that were submitted to and accepted by the Department. The Department also refused multiple requests from CEHE to meet and discuss any issues the Department had with CEHE’s applications, structure, or operations.

For the first time in March 2016, the Department asserted that CEHE’s colleges must comply with regulations applicable to for-profit colleges – regulations that did not exist at the time CEHE took ownership of the colleges.

A central piece in the Department’s decision was its determination that CEHE’s payment of debt violates the regulatory definition for nonprofit institutions.

“If making debt payments equals failing the definition of a nonprofit institution, then almost every nonprofit college in America will now fail the Department’s definition – including Columbia University and Stanford University – the alma maters of Secretary John King and Under Secretary Ted Mitchell, respectively,” said Eric Juhlin.

When a CEHE board member asked Mr. Juhlin if he was afraid that the Department might retaliate for CEHE’s response, Mr. Juhlin replied, “Yes, I’m concerned! The Department can effectively close the colleges by delaying students’ financial aid through heightened cash monitoring 2 or imposing an impossibly large letter of credit on CEHE. All we can hope for is that a federal regulatory agency such as the Department of Education will honor our right to voice disagreement and will refrain from retaliating.”

CEHE believes that the facts, regulations, and legal precedent overwhelmingly support a reversal of the Department’s decision. CEHE is requesting that the Department evaluate the status of CEHE’s colleges objectively and fairly and issue standard program participation agreements to CEHE’s colleges recognizing their true and legal status as nonprofit institutions – consistent with approvals of similar transactions and fundamental fairness.

CONTACT:
Eric S. Juhlin
Chief Executive Officer
Center for Excellence in Higher Education (“CEHE”)
801-622-1555
eric.juhlin@collegeamerica.edu