Students at 28 campuses owned by Corinthian Colleges Inc. encountered locked doors and posters bearing messages from angry students on Monday, signs of the abrupt end of the for-profit higher-education company that had been under intense scrutiny by the U.S. Department of Education.
After Corinthian’s announcement on Sunday night that four of its subsidiaries — Everest College, Everest Institute, Heald College, and WyoTech — would close because the parent company had failed to find a buyer for them, many questions remained about how the decision to shut down had been made and what would come next for the 16,000 students enrolled in the colleges, most of them in California and other western states.
"There’s a lot of panic going on," said Brian Murphy, president of De Anza College, in Cupertino, Calif. De Anza and other community colleges are trying to obtain contact information for the students so they can reach out to them directly and let them know they can apply. "There are 11 community colleges in the Bay Area that would welcome their participation," he said.
Brianna L. Christopherson, a 25-year-old studying medical assisting at Heald College at Fresno, said she was devastated by news of the campus’s closure. She said that Heald officials had warned that this might happen — even suggesting that students get their transcripts in advance — but after they returned from spring break without any news of closing, she thought they were in the clear.
Ms. Christopherson described her experience at Heald as "wonderful" and isn’t sure she can replicate it elsewhere. She plans to continue her education, but as of now she has no idea where.
Also at issue is what will happen to the student loans taken out by those students. The tab to taxpayers could be as high as $214 million if all of the affected federal loans were forgiven, according to an estimate by the Education Department. Following is a review of other key questions raised by the colleges’ sudden closing.
Could the dislocation of 16,000 students have been averted?
Yes, at least according to Corinthian. Company officials contend that they had viable buyers for the Everest, Heald, and WyoTech campuses in California, but that those deals fell through because the California attorney general’s office refused to relieve the prospective buyers of liability stemming from the agency’s pending lawsuit.
In fact, some possible buyers of Heald had begun preliminary discussions with the college’s accreditor, the Western Association of Schools and Colleges. "There were some good buyers in the mix," said Mary Ellen Petrisko, president of the association’s Commission for Senior Colleges and Universities.
A Corinthian spokesman said on Monday the company had held out hope that there would be buyers for at least most of its campuses, until the Department of Education slapped a $29.6-million fine on Heald two weeks ago for alleged misrepresentation of job-placement rates.
Corinthian still plans to contest the fine, the spokesman said.
Robyn C. Smith, a lawyer with the National Consumer Law Center, said she felt the California attorney general had made the right decision in not waiving liability for potential buyers.
"Whoever takes over this corporation will profit from it and should be liable for whatever the previous owner did," she said.
Still, Ms. Smith said, some people questioned whether a sale was appropriate, or if a buyer could "turn around a corporation and a school like Corinthian that sort of is permeated with illegal and deceptive recruitment and other types of practices."
What will happen to all of those students?
For at least the last week, Corinthian officials had been contacting other colleges in California to try to arrange formal relationships that would allow their students to transfer. But as the head of Concorde Colleges, Tim Foster, noted, such transfers can be very complex, especially for students who rely on financial aid. Students in programs at Everest Colleges, for example, may lack the right courses to fit into Concorde’s nursing and related curricula. And even if they are willing to spend more time to work toward a degree, they may run up against limits that Concorde imposes on loans that it issues, or be unable to obtain Pell Grants.
"An event like this does nothing but erode student’s commitment and confidence," said Mr. Foster. "Some chunk of them are going to opt out of the educational opportunity."
The Education Department’s Federal Student Aid office has compiled a list of colleges in a 25-mile radius of each of the closed campuses, identifying other institutions that offer similar programs. And, in a statement, it said:
We will work hard over the coming weeks to provide information to CCI students about their options. Starting today, we are sending CCI students an email directing them to FSA’s website, which contains pertinent information regarding their current options, including a list of programs that are close to their school locations to which students may be able to transfer. In addition, as students come in to their schools to procure their paperwork, the Department will be participating in transfer fairs with Corinthian — an opportunity for students to be paired with schools that are in close proximity to where those students live. For students that do not desire to transfer to another school, the closed school discharge is available.
The California attorney general’s office is creating an online interactive tool for Corinthian students to help guide them through the process, sharing a link to applications for a closed-school discharge of their federal loans and providing information on legal services, said Ms. Smith, of the National Consumer Law Center.
In California, she said, legal-services professionals are coordinating to provide clinics or help in completing the forms. "They are fairly simple forms," she said, "but I know this can be daunting for a lot of students, and some may feel better if they have help doing that."
Ms. Smith suggested that displaced students be wary of enrolling in another for-profit college. Many such institutions will see those students as a new target population, she said.
The office of the California Community Colleges chancellor released a statement indicating the system would try to support the students:
The California Community Colleges Chancellor’s Office, in conjunction with other state and federal agencies, is working to assist students who have been affected by the recent regulatory actions involving Corinthian Colleges. Our 112 colleges, which serve 2.1 million students, are ready to help students who wish to pursue their educational goals at community college. Students can find resources on financial aid, enrollment, student performance outcomes and career orientation at http://californiacommunitycolleges.cccco.edu/ as well as at the following link at the California Department of Justice website: www.oag.ca.gov/Corinthian.
What happens to the student loans of the affected students?
Corinthian students will qualify for closed-school discharges of their federal student loans. Students who are unable to complete their education because of a college’s closing will be covered, said Ms. Smith.
Although students will be eligible for such discharges, they may not be aware of it, said Sen. Elizabeth Warren during a forum on the student-debt crisis held at Howard University on Monday.
"The Department of Education knows who these borrowers are, and it has all the information it needs to discharge the loans," she said. "But the department isn’t doing that — it isn’t setting up a process for relief. It isn’t even telling students that they might qualify for relief."
The tool is useless if it’s not used effectively, said Ms. Warren, a Massachusetts Democrat. "Instead of collecting payments from students who were ripped off, the government should do everything it can to protect borrowers and hold colleges accountable."
There also may be some relief options for students who took out private loans. Several states have student-protection funds that may relieve them of the loans, Ms. Smith said. The California attorney general’s office issued a statement warning students that if they transferred their credit to another college, they might lose their ability to have their loans discharged.
"But unfortunately," said Ms. Smith, "there’s nothing you can do about the lost time and the work that they put into their Corinthian education."
Kelly Field contributed to this article.
Goldie Blumenstyk writes about the intersection of business and higher education. Check out www.goldieblumenstyk.com for information on her new book about the higher-education crisis; follow her on Twitter @GoldieStandard; or email her at firstname.lastname@example.org.