Education Department Takes Steps to Hold Leaders of Risky Colleges Personally Liable
March 2, 2023
Guidance clarifies implementation of long-standing statutory provisions
Today, the U.S. Department of Education (Department) released guidance outlining how it will implement long-standing provisions in the Higher Education Act that grant the Secretary authority to require leaders of private colleges that fail to operate in a financially responsible way to assume personal liability for the cost of unpaid debts owed to the Department of Education. The guidance clarifies the circumstances in which the Department may require certain individuals to assume personal liability as a condition of allowing the schools they own or operate to participate in the federal financial aid programs and details the considerations that the Department will take into account when determining whether to require an individual to assume personal liability by signing the institution’s program participation agreement. The Department would then be able to pursue those individuals for the cost of liabilities that are not otherwise paid for by their institutions, including those stemming from closed school and borrower defense discharges.
