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For-Profit Higher Ed

Corinthian Colleges Inc. to Close Its Remaining Campuses

By Charles Huckabee April 27, 2015

Corinthian Colleges Inc., the for-profit-college company that was pushed to the brink of collapse last summer when the U.S. Department of Education tightened its financial oversight of the troubled enterprise, announced on Sunday that it had ceased operations and would close all of its remaining 28 campuses as of Monday.

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Corinthian Colleges Inc., the for-profit-college company that was pushed to the brink of collapse last summer when the U.S. Department of Education tightened its financial oversight of the troubled enterprise, announced on Sunday that it had ceased operations and would close all of its remaining 28 campuses as of Monday.

Approximately 16,000 students will be affected by the closures, which involve the Corinthian subsidiaries Everest College, Everest Institute, Heald College, and WyoTech, mostly in California and other western states.

Corinthian reached an agreement with the Education Department last year to sell 95 of its campuses in the United States and Canada and to “teach out” and close the other 12. It announced in November that it had agreed to sell 56 campuses to the ECMC Group, a nonprofit student-loan servicer. A new division of ECMC, Zenith Education Group, now manages those campuses.

In its statement on Sunday, Corinthian said that it had been negotiating with several parties to sell the remaining campuses but that those efforts had been unsuccessful, “largely as a result of federal and state regulators seeking to impose financial penalties and conditions on buyers and teach-out partners.”

Fines and Lawsuits

One huge penalty looming over the company was imposed earlier this month, when the Education Department notified Corinthian that it intended to levy a $29.7-million fine on the company’s Heald College system, accusing it of misrepresenting job-placement rates to current and prospective students. Corinthian said at the time that the allegations were based on flawed analysis and that it planned “to contest everything.”

The State of California has also taken several regulatory and legal actions affecting the company. The state’s attorney general, Kamala D. Harris, filed a lawsuit last fall accusing Corinthian and its subsidiary colleges in California of “false and predatory advertising, intentional misrepresentations to students, securities fraud, and unlawful use of military seals in advertisements.”

And just last week, a state consumer-affairs bureau issued an emergency decision that ordered Corinthian’s Everest and WyoTech locations in California to cease enrolling new students as of Friday.

Jack D. Massimino, Corinthian’s chief executive, said in Sunday’s announcement that company officials “believe that we have attempted to do everything within our power to provide a quality education and an opportunity for a better future for our students.”

He added, “Unfortunately the current regulatory environment would not allow us to complete a transaction with several interested parties that would have allowed for a seamless transition for our students. I would like to thank our employees for their selfless dedication and commitment to fulfilling the educational and career goals of all of our students.”

The company said it was working with other institutions to help students at the closing Corinthian campuses continue their educations.

Calls for Student-Loan Forgiveness

Ted Mitchell, the U.S. under secretary of education, said in a blog post on Sunday that the Education Department would reach out to Corinthian students “to review all their options, which may include loan discharges for students whose school closed.”

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A number of groups and individuals — including Ms. Harris and the attorneys general of eight other states — have called on the department to forgive the loan debt of students who attended Corinthian campuses.

A spokeswoman for Ms. Harris’s office said on Sunday that the California attorney general’s office would continue to “work closely with state and federal partners to ensure that these students get the relief they deserve.”

The Institute for College Access and Success, a student-advocacy group that has long lobbied for increased protections of students at for-profit colleges, is also calling for Corinthian students to “be given a fresh start by having their loans discharged.”

“It is unconscionable that, until a few days ago, Corinthian was still enrolling new students and receiving taxpayer funding,” Pauline Abernathy, vice president of the advocacy group, which is known as Ticas, said in an email to The Chronicle. “It should have been stopped years ago. The federal government, states, and accreditors need to be much more aggressive in holding schools accountable.”

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U.S. Sen. Richard J. Durbin, an Illinois Democrat and longtime advocate of greater oversight of for-profit colleges, spoke in even blunter terms as he joined those calling for debt relief for Corinthian students.

“Finally, we see the end of this rotten company,” Senator Durbin said in a statement issued on Sunday, “but there are still thousands of students who may never see the end of the damage Corinthian has caused if the Department of Education doesn’t move quickly to provide some relief.”

On a ‘Knife Edge’

Pressure to hold education companies accountable seems likely to continue. Mr. Mitchell, who is the department’s top higher-education official, signaled as much in his post on Sunday. What Corinthian students experienced “is unacceptable,” he wrote, and department officials “look forward to working with Congress in an effort to improve accountability and transparency in the career-college industry.”

Kevin Kinser, an associate professor at the State University of New York at Albany who studies for-profit colleges, said Corinthian’s precipitous fall from where the company was a few years ago “shows the knife edge that for-profit higher education is on.”

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For-profit colleges “need a supportive regulatory environment to thrive,” Mr. Kinser wrote in an email to The Chronicle. “When that is gone, they don’t seem to have a lot of residual support to sustain their activities.”

Corinthian’s collapse doesn’t mean all for-profit colleges will fail, Mr. Kinser said. “But it does mean the business model they relied on for the last decade is gone.”

The Association of Private Sector Colleges and Universities, whose president, Steve Gunderson, has assailed the Obama administration for what he calls an ideological campaign against for-profit colleges, declined to comment on Sunday about the particulars of Corinthian’s latest actions.

“As outsiders we don’t know all the facts, but we do know that Corinthian schools educated thousands of students who had been underserved by traditional higher-education institutions,” the association said in a statement. “We hope that the department will work with all stakeholders to ensure that these students do not lose access to higher education as a result of today’s announcement.”

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As recently as last week, speaking at a meeting of the Education Writers Association, Mr. Gunderson publicly questioned the department’s motives in imposing the fine of nearly $30 million on Heald College.

Goldie Blumenstyk contributed to this article.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
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Charles Huckabee
About the Author
Charles Huckabee
Charles Huckabee was an editor at The Chronicle of Higher Education. He earned a bachelor’s degree from the University of South Carolina
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