On March 23, 2022, the U.S. Department of Education (ED) announced its intention to hold corporate owners, investors and controlling parties of private institutions of higher education directly liable for the school’s conduct.
This announcement means the ED may take direct administrative action against the school’s corporate owners for the school’s liabilities, and other third parties may sue the corporate owners under various laws such as the federal False Claims Act, unfair and deceptive acts and practices statutes, or other consumer protection laws. Although the ED’s new policy applies to all private, postsecondary institutions, the policy targets proprietary colleges and universities, which typically are owned or controlled by publicly traded corporations or private equity firms.
