The U.S. Supreme Court case Cleland, Administrator of Veterans' Administration, et al. v. National College of Business in 1977 dealt with the issue of whether or not a private business college was entitled to receive payment from the Veterans' Administration (VA) for tuition and other fees for students who were veterans under the GI Bill but had withdrawn before completing their courses. The VA argued that it should only be required to pay for actual instruction received by veteran-students while they were enrolled at the school, rather than paying upfront costs regardless of student completion rates as per contract between VA and schools. The court ruled in favor of the VA stating that federal regulations did not require them to make payments when no educational services were provided due to early withdrawal by students.

In the dissenting opinion for Cleland v. National College of Business, Justice Brennan disagreed with the majority's interpretation of 38 U.S.C. §1791(a)(3). He argued that this statute does not require a school to be publicly funded in order to qualify as a "nonprofit educational institution." Instead, he believed that any school which reinvests its earnings back into itself rather than distributing them as profit should meet this definition. Furthermore, he contended that Congress intended for veterans to have broad access to educational opportunities under the G.I. Bill and other similar programs; therefore, excluding private nonprofit schools from these benefits would contradict legislative intent. Finally, Justice Brennan pointed out inconsistencies in how different federal agencies interpret "nonprofit," suggesting a need for uniformity across government departments.