National American University lawsuits fall into two main tracks: a Missouri class action brought by former students who say the for-profit school misled them about tuition, credit transfers, and job prospects, and a federal whistleblower case brought by a former employee who alleges the university defrauded federal student-aid programs. Both surfaced as the Rapid City, South Dakota–based institution was closing campuses, shedding students, and drawing regulatory scrutiny. Neither has a publicly reported final judgment or settlement in the available record.
The Missouri Student Class Action
In the fall of 2017, two former students from the Kansas City area, Shayanne Bowman of Lee’s Summit and Jackquelynn Mortenson of Blue Springs, sued Dlorah Inc., doing business as National American University, in Jackson County Circuit Court. The firm Humphrey, Farrington & McClain filed the complaint, which accused NAU of running a “systematic, deceptive marketing scheme” through ads, publications, and recruiters that misled students about what school would cost, what they would learn, and what jobs they could expect.1The Kansas City Star. National American University Faces Class-Action Lawsuit
The plaintiffs alleged that NAU told them their credits would transfer to other schools, including Metropolitan Community College at Penn Valley and Park University, and that area employers hired NAU graduates in greater numbers than graduates from competing schools. The complaint also accused the school of steering students into loans larger than the actual cost of their courses.1The Kansas City Star. National American University Faces Class-Action Lawsuit
NAU tried to move the case to federal court, but it was sent back to Jackson County. By August 2019, six more former students had joined, bringing the total number of named plaintiffs to eight, including Zaimah Muhammad. The amended complaint added claims of fraud, negligence, conspiracy, and violations of Missouri’s merchandising practices act.2FOX4 Kansas City. National American University Now Facing Class-Action Lawsuit in Wake of Campus Closures
Plaintiffs described being recruited by what they called an “army of aggressive, persistent enrollment advisors.” They said programs took longer and cost more than promised, that instructor turnover hurt the quality of teaching, and that administrative staff were unreachable in the evenings even though evening students had been told otherwise.3Higher Ed Dive. 6 More Students Join Lawsuit Against National American U. The same firm had won a $3 million settlement in 2017 for 264 former students of Wright Career College, another for-profit school.1The Kansas City Star. National American University Faces Class-Action Lawsuit
The available research does not show whether the class was certified or whether the case reached settlement or verdict.
The Federal Whistleblower Case
In April 2017, Brian Gravely, a former continuing legal studies director who had spent nearly a decade at NAU, filed a whistleblower suit in federal court in South Dakota. He alleged the university had defrauded federal student-loan programs by making “intentionally fraudulent misrepresentations” to obtain millions in aid it was not entitled to receive.4Argus Leader. S.D. For-Profit University System Accused of Defrauding Federal Student Aid Program
The complaint centered on four allegations. Gravely said employees manipulated medical assistant program records so files would look compliant during audits. He said NAU paid staff bonuses tied to how many students they enrolled, a practice barred by federal higher-education rules. He said students were pushed into loans for credit hours they did not need while waiting for the school to arrange required internships. And he said NAU violated the federal 90/10 rule, which requires at least 10 percent of a covered school’s revenue to come from sources other than federal student aid, by misclassifying loan revenue to hide the shortfall.
The suit was filed under seal and unsealed after review by the U.S. Attorney’s Office in South Dakota.4Argus Leader. S.D. For-Profit University System Accused of Defrauding Federal Student Aid Program Gravely also said he was fired in May 2016 in retaliation for raising concerns internally. NAU denied every allegation in its court filings and said his termination was part of a reduction in force.5Argus Leader. National American University Got Bailout Money Despite Fraud Allegations
As of June 2020, the parties were nearing a court-ordered deadline to finish discovery.5Argus Leader. National American University Got Bailout Money Despite Fraud Allegations No public report in the available research documents a final ruling.
The Closures That Set the Stage
The lawsuits landed as NAU was shrinking fast. Four years before an April 2019 report, the school had enrolled nearly 10,000 students; by February 2019, that number had fallen to about 3,800. Revenue was down more than $15.2 million, or 26 percent, from the prior year. In a January 2019 filing, the company said the shortfall raised “substantial doubts” about its ability to keep operating.6Inside Higher Ed. National American University Latest For-Profit Chain to Face Financial Turmoil
The school shifted to online-only instruction and began closing physical sites. In May 2019, it announced the closures of its Overland Park, Kansas, and Independence, Missouri, campuses. Students in hands-on programs like surgical technology and nursing said they were caught off guard. One reported $20,000 in debt and worried her credits would not transfer. NAU offered affected students up to $6,500 to cover credits other schools would not accept.7FOX4 Kansas City. National American University Closing Overland Park, Independence Campuses
By late 2018, NAU had already halted new enrollment in 34 of its 128 programs. Most physical sites were phased out, aside from locations at Ellsworth Air Force Base and Kings Bay Naval Submarine Base, and a teach-out agreement with Brookline College was set up for students who could not finish.6Inside Higher Ed. National American University Latest For-Profit Chain to Face Financial Turmoil
Federal and Congressional Scrutiny
In March 2019, the U.S. Department of Education found NAU out of compliance with the financial-responsibility standards that schools receiving Title IV student aid must meet. It demanded a letter of credit worth roughly $36.6 million (half of federal aid revenue), or 15 percent combined with provisional certification, and placed NAU on heightened cash monitoring with biweekly and monthly financial reporting.6Inside Higher Ed. National American University Latest For-Profit Chain to Face Financial Turmoil
Some of the whistleblower complaint’s themes had appeared years earlier in a 2012 U.S. Senate Health, Education, Labor, and Pensions Committee report on the for-profit college sector. The committee said NAU spent $2,384 per student on marketing in 2009 against $1,811 per student on instruction, kept one recruiter for every 49 students, and drew 80 percent of its 2010 revenue from federal sources including student aid and military education benefits. Its long-term student withdrawal rate stood at 54 percent. The report also said recruiters were told to “create a sense of urgency” and to avoid sharing full program costs, quoting only per-credit-hour rates, and that students reported being misled about accreditation and denied refunds.8VetEdSuccess (Archived Senate HELP Committee Report). For-Profit Higher Education: National American University Holdings, Inc.
Not the Same School as American National University
National American University in South Dakota is often confused with American National University, a separate for-profit school based in Virginia. They are unrelated. American National University appears on the approved-school list in the Sweet v. Cardona borrower-defense class-action settlement, which provided loan relief for students of certain for-profit colleges. National American University is not on that list, so borrowers looking for relief through that settlement should confirm which school they attended.9U.S. District Court, Northern District of California. Sweet v. Cardona, Exhibit C: Approved Schools
Where NAU Stands Now
National American University operates as a fully online school. In June 2026, it held a virtual commencement for 257 graduates and continues to enroll students in more than 100 degree and certificate programs.10National American University. Congratulations to the NAU Class of 2026 It remains accredited by the Higher Learning Commission, though in September 2025 the HLC denied its request to offer a bachelor’s degree in management in a reduced-credit format.11Higher Learning Commission. Accreditation Actions, September 2025
Corporate parent National American University Holdings Inc. was delisted from Nasdaq in early 2019 after its market capitalization dropped below the $5 million minimum.12Higher Ed Dive. For-Profit National American University Exits Nasdaq Shares now trade on the OTCQB Venture Market under the ticker NAUH.13OTC Markets. NAUH Disclosure Page
If you were an NAU student and believe you were misled about credits, costs, or job outcomes, keep records of your enrollment documents, marketing materials you received, and any communications with recruiters. Former students in Missouri can look at the Jackson County Circuit Court docket for updates in the Bowman case, and borrowers who think their claims fit a federal borrower-defense application can file directly with the Department of Education even without a class settlement covering their school.