Education Management Corp. Faces SEC Investigation

The huge for-profit higher-education company, which operates a range of postsecondary institutions, received a subpoena to provide investigators at the Securities and Exchange Commission with “documents and information relating to the company’s valuation of goodwill and to its bad debt allowance for student receivables,” according to a corporate filing. The company said it planned to cooperate with the investigation.

Education Management also disclosed it expects bad debt expenses to increase because of the reduced availability of federal and private student loans. The company said it is responding by offering more scholarships to Art Institutes students and extending larger loans to students who were denied federal PLUS loans. It also extended the maximum length of payment plans from 36 to 42 months.

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