Friday, June 27, 2014

Twelve Senators say Corinthian should stop enrolling students

A dozen U.S. senators, all Democrats, are pushing Corinthian Colleges Inc. to stop accepting new students in a letter to the Department of Education.
Corinthian owns the Everest College, Heald College and WyoTech schools and has about 75,000 students. Its Milwaukee campus closed after less than two years of opening with drop out rates of more than 50% and job placement rates of less than 6%.
The Education Department this week worked out a deal with Corinthian that gives it $16 million in federal student aid funds to keep the company running as it figures out a plan to sell or close many schools over the next six months. Corinthian, which has more than 100 campuses, said it will look for new owners for most of its schools and hopes to have sales agreements in place within about six months.
Santa Ana, California-based Corinthian had warned last week that it could go out of business after U.S. regulators limited its access to federal funds. The government is scrutinizing the company over allegations that it altered grades, student attendance records and falsified job placement data used in ads.
In the letter addressed to Education Department head Arne Duncan Thursday, the 12 senators said students need to be protected from the company. Iowa Senator Tom Harkin, who is also the chairman of the Senate Health, Education, Labor, and Pensions Committee, was one of the politicians who signed the letter.
"Corinthian has shown itself to be one of the worst actors in the for-profit college industry," the letter said.
Representatives from Corinthian and the Education Department did not immediately respond to a request for comment.
The letter also wants the Education Department to make sure the company explains to students its plans and to stop any for-profit education company that's under investigation from purchasing from or taking on students from Corinthian.

Tuesday, June 24, 2014

Corinthian reaches deal with Feds to remain open

Moving to head off a cash shortfall, the consequence of the Corinthian College's failure to comply with federal reporting regulations, the controversial for-profit college announced on Monday that it had reached an agreement with the federal Department of Education that would allow it to continue operating, at least temporarily.

 Under the memorandum of understanding, Corinthian, a publicly traded company based in Santa Ana, Calif., will immediately receive $16 million in federal student aid funds — the amount it said it needed to keep operating through Friday. By July 1, the company and the government plan to agree on a transitional operating plan, specifying which schools will be sold and which will be phased out.

 The company operates 107 campuses of the Everest, Heald and WyoTech institutions, as well as online programs. It's controversial Milwaukee campus closed slightly more than a year ago, less than two years after it had opened after its job placement rates of less than 6% and drop out rates of more than 50% were revealed. 

Even with the agreement, Corinthian’s future remains shaky at best. How this will play out is uncharted territory, said Terry Hartle, senior vice president of the American Council on Education. “This avoids a precipitous closure, but it’s not a long-term or even medium-term solution,” Mr. Hartle said. “It’s a short-term agreement to see what kind of arrangement they can reach to avoid the biggest closure we have ever had, throwing 72,000 students into the street.”

 In the government’s statement, Under Secretary of Education Ted Mitchell said, “We will continue to closely monitor the teach-out or sale of Corinthian’s campuses to ensure that students are able to finish their education without interruption and that employees experience minimal disruption to their lives.”

 Corinthian has been battered by declining enrollments and a rush of federal and state investigations and lawsuits accusing it of preying on low-income students, falsifying job placement rates and leaving too many students with crippling debt and no useful job credentials. Like other for-profit higher education companies,

Corinthian receives most of its revenues from federal student aid programs — about $1.4 billion a year, the government says, from federal student loans and Pell grants for students who enroll in its programs, including health care, business, criminal justice and transportation technology.

The department warned that it could revoke some of the company’s eligibility to receive federal funding. Usually, the money arrives a few days after a student enrolls. But the Department of Education pushed Corinthian into a financial bind on June 12 by imposing a 21-day delay in the disbursement of the federal aid funds. This “heightened cash monitoring,” the department said, was a response to the company’s failure to address “ongoing concerns over the company’s practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance.” Under the agreement, an independent monitor approved by the federal agency will review matters related to Corinthian’s operations, with full access to the company’s financial and operating records.

While Corinthian will be allowed to continue enrolling new students, it will have to reimburse any students who enroll in a campus found to be ineligible for federal student aid after the department’s review. “I find it disturbing that at a time when Corinthian is close to going out of business, they’re still going to allow new students to come to the ones they’re trying to sell,” said Stephen Burd, a senior policy analyst at the New America Foundation in Washington.

 Corinthian is under investigation by the Consumer Financial Protection Bureau and the Securities and Exchange Commission. It is also being sued by a number of attorneys general, including those in California and Massachusetts.

 Under the Obama administration, the Education Department has been increasing its oversight of for-profit institutions, whose students are more likely to take on large student debt and default on their student loans. The industry and the administration have been battling for several years over proposed “gainful employment” regulations, which would cut off eligibility for federal student loans for programs with too many graduates who default or earn too little money to make loan repayment realistic.