Independence University — A “Nonprofit” That Sold Fictional Salaries, Then Vanished Overnight

Summary

Independence University was an online career college based in Salt Lake City, Utah, that traced its roots to a school founded in 1978 and shut down without warning on August 1, 2021, after its accreditor moved to revoke its accreditation and the U.S. Department of Education turned off the federal aid that kept it alive. It was one of four schools — alongside CollegeAmerica, Stevens-Henager College, and California College San Diego — owned and operated by the Center for Excellence in Higher Education (CEHE), a Utah entity controlled by the for-profit-education entrepreneur Carl Barney, who had restyled his chain as a "nonprofit" in a conversion that regulators and courts came to treat with deep suspicion.

The school sold the same product every predatory career chain sells: the credible promise of a job. CEHE marketed its programs on the strength of salary figures and employment rates that a federal review later found to be widespread, pervasive misrepresentations — claims about what graduates earned and how readily they were hired that did not survive scrutiny. The students it recruited were disproportionately the people the fraud requires: low-income, including a large cohort attending on GI Bill benefits, enrolling in four-week-module online programs with completion rates so low — a 12 percent bachelor's graduation rate at Independence by some measures, sub-25-percent completion in some programs — that the credential was, for most, a debt with no degree attached.

The end came the way these ends usually come, through the regulators rather than the market. In 2020 Colorado fined Carl Barney roughly $3 million for defrauding students. By the spring of 2021 the school had received no federal cash since May 2020, its accreditor, the Accrediting Commission of Career Schools and Colleges (ACCSC), had moved to withdraw accreditation effective May 31, 2021, and the Department of Education had effectively closed the spigot. On July 29, 2021, CEHE told the Department all four schools would close; on August 1 they did, stranding their students mid-program.

What survived was the bill — and it landed on the public. In January 2025 the Department of Education discharged the federal loans of borrowers who had attended any CEHE school between January 1, 2006, and the August 1, 2021, collapse: roughly $1.15 billion for about 73,600 borrowers, granted automatically, on the finding that CEHE had engaged in widespread substantial misrepresentation. The Department also moved to put CEHE itself on the hook for tens of millions in closed-school discharges. Independence University ended as a case study in how a for-profit can dress itself as a charity and still operate as a debt machine pointed at the vulnerable.

Timeline

A Career Chain in Charity's Clothing

Independence University did not begin as a fraud. Its lineage ran back to a 1978 school, California College for Health Sciences, in a network whose Stevens-Henager component dated to 1891 — genuinely old vocational roots. The institution that closed in 2021, though, bore little relation to those origins. Renamed Independence University in 2005 and reorganized in the years that followed, it had become an online career college organized into four "schools" — Healthcare, Business, Technology, and Graphic Arts — delivering programs in monthly four-week modules to students who rarely set foot on a campus because there was, increasingly, no campus to set foot on.

The defining maneuver of the era was structural. Carl Barney, the entrepreneur who controlled the chain, moved to convert his for-profit colleges into a "nonprofit" operated by the Center for Excellence in Higher Education. On paper this transformed a profit-seeking business into a tax-exempt charity; in substance, regulators and courts came to view the conversion as a device that preserved the founder's financial interest while shedding the heightened scrutiny that federal rules apply to for-profits. The "nonprofit" label was the costume. The operation underneath remained what it had been: an enterprise that converted federal student aid — Pell grants, federal loans, GI Bill benefits — into institutional revenue, and that grew by recruiting.

And it recruited, deliberately, among the people federal aid exists to lift. The student body skewed heavily low-income; more than 500 students attended on GI Bill benefits, the veterans' education funding that a quirk of the rules made especially valuable to schools like this one. The pitch to all of them was a salary and a job. There was no golden age of scholarship here to mourn — Independence's "height" was an enrollment height, a marketing height, a chain operating at scale across multiple brands while its students churned through short modules. The numbers tell the truer story: completion rates in some programs ran below 25 percent, and a bachelor's-degree graduation rate at Independence reported around 12 percent. For most who enrolled, the product delivered debt, not a degree.

The Salary That Was Never There

A career school sells exactly one thing: the credible expectation that the credential leads to work that pays. CEHE's marketing supplied that expectation in numbers — advertised salaries, advertised employment rates, the affordability of its in-house "EduPlan" financing — and a later federal review concluded that those numbers were, across the chain, widespread and pervasive substantial misrepresentations. The salary figures graduates could supposedly expect, the ease with which they would supposedly be hired: the Department of Education found these to be misstatements pervasive enough to taint enrollment across CEHE's online programs and brick-and-mortar campuses alike.

The regulators arrived before the reckoning did. In September 2018 ACCSC placed Independence on probation. In April 2020 Colorado won a judgment fining Carl Barney roughly $3 million for defrauding students at CEHE schools — a finding by a state, against the chain's principal, that the marketing had crossed from puffery into deception. These were not abstract compliance disputes. They were determinations that the central promise the school made to its students was false, made to a population — veterans, low-income adults, first-generation students — chosen precisely because aid eligibility was the product's raw material and because trust and inexperience are exactly what such a sale requires.

The cruelty, as with every chain of this kind, was in the targeting. A scheme that recruits the vulnerable does not stumble onto them; it seeks them. The GI Bill cohort was prized because veterans' benefits filled a funding-formula need; the low-income cohort was prized because their federal aid eligibility was the revenue. The "nonprofit" framing made the whole thing look like a public good. It was, at its core, a machine for turning public education dollars into private benefit, sold on a salary figure that the people who designed it knew the graduates would rarely see.

The Five Factors

Aftermath

The immediate casualties were the students enrolled when CEHE gave the Department two days' notice on July 29, 2021. They were cut off mid-program on August 1, with no teach-out, and left to navigate a transfer landscape that Utah's higher-education system assembled only after the closure — seven institutions reviewing Independence credits course by course, which in practice meant most credits evaporated. The students hit hardest were the ones the chain had courted most aggressively: the low-income and the more than 500 GI Bill recipients, who had spent benefits that do not regenerate on a credential that, for most, never arrived.

The long aftermath rewrote the financial story but not the human one. The January 2025 discharge — roughly $1.15 billion automatically cancelled for about 73,600 borrowers, reaching all the way back to 2006 — was real, and the largest such CEHE action to date, but it could not return the years, the GI Bill months, or the careers the school had promised and not delivered. Colorado's earlier $3 million judgment against Carl Barney stood as a state's formal finding of fraud; the Department separately pursued CEHE for tens of millions in closed-school liability. What endures is the precedent: a "nonprofit" that operated as a debt machine, and a federal record that names the salary figures as the misrepresentation that justified cancelling the debt.

Lessons

References

• Education Department Cancels Debts for Students Who Attended Disgraced CEHE Schools Republic Report
• Education Department puts CEHE on the hook for $23M in closed-school loan discharges Higher Ed Dive
• Independence University Closure Information and Student Resources Utah System of Higher Education
• NCLC Statement in Response to Department of Education Loan Relief For Additional Students Harmed By Their School National Consumer Law Center
• Independence University Wikipedia