U.S. Department of Education to Announce Initiative to Hold Corporate Entities of Institutions Liable for Outstanding Liabilities
CECU
March 22, 2022
CECU has learned that the U.S. Department of Education will announce an initiative tomorrow morning to ensure that companies that own higher education institutions that close or owe other liabilities to the federal government are held responsible. We have heard that the Department is not focused on imposing personal liability for owners. Instead, the Department plans to hold corporate entities, such as parent companies, liable in certain circumstances like when an institution closes and leaves outstanding liabilities.
Specifically, the Department will require any corporate entity with 50 percent interest in a non-public college (i.e., proprietary institutions and private nonprofit colleges) to sign the institution’s program participation agreement (PPA). These PPAs are likely to make all corporate entities that sign jointly and severally liable for the institution’s liabilities.