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August 31, 2016

College Chain Files Suit Over Nixed Bid for Nonprofit Status

A for-profit chain of colleges that was denied nonprofit status by the U.S. Education Department filed a legal challenge Tuesday alleging that political bias against commercial higher education drove the decision, reports The New York Times. The Center for Excellence in Higher Education’s suit accuses the agency of trying to put the colleges out of business by refusing to classify them as nonprofit for education purposes and thus limiting their access to federal student aid.

In rejecting the center’s request earlier this month, the department asserted that the organization was seeking to circumvent strict regulations on for-profit colleges implemented by the Obama administration and that Carl Barney, the institutions’ founder and former owner, remains their primary financial beneficiary.

The center, created in 2006 as a nonprofit dedicated to promoting free-market principles, acquired the colleges in 2012. Donations and loans from Mr. Barney covered most of the $636 million purchase price, and he serves as the center’s chairman. “I built up the schools. I put my own money in,” he said. “I don’t want to just walk away.” The Education Department declined to comment on the suit.