Florida Coastal School of Law (FCSL) has filed a lawsuit against the US department of education for denying the school access to the federal student loan programme that it needs to operate.

The law school also claims the department manufactured reasons to close the school whilst retaining letters of credit (L/Cs) posted to guarantee that FCSL meets requirements to remain eligible for Title IV funding that helps finance students' studies.

Essentially, the L/Cs guarantee that the school is a going concern and financially robust enough to deliver each student with the entire course on which he or she is enrolled.

L/C made no difference

The owner of FCSL posted security in the form of a US$5.6 million L/C because the department represented that the law school would remain eligible for Title IV if it did so.

But after taking the L/C, the department nonetheless refused to continue FCSL's eligibility according to the claim.

Manufactured reasons for closure

The law school says the department manufactured reasons to keep the school closed and "egregiously mischaracterised" FCSL's audited financial statements to question the school's ability to continue as a going concern.

The claim concludes that the department's decisions appear to be calculated "to further its goal of closing FCSL while retaining the L/Cs".

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.