Corinthian Colleges Completes Collapse, Closes Remaining Campuses Effective Immediately

Although it was nearly a year in the making, the largest collapse in U.S. higher education finally occurred Sunday, as embattled for-profit education chain Corinthian Colleges Inc. – the operator of Everest University, Heald College and WyoTech – announced it would close the remainder of its campuses effective Monday.

CCI, which has been at the center of a very public downfall since last July, published a notification on its website Sunday declaring it would cease all operations and discontinue instruction at its remaining 28 campuses.

By shutting its doors on Monday, the California-based for-profit chain will end the current college careers of some 16,000 students. The company says it is currently working with other schools to provide continuing educational opportunities for those students.

CCI’s final school closures include 13 remaining Everest and WyoTech campuses in California, Everest College Phoenix and Everest Online Tempe in Arizona, the Everest Institute in New York. As well as 10 locations of Heald College in California, one in Hawaii and one in Oregon.

The company’s prolonged collapse began last July when it entered into an agreement with the Department of Education to sell or close a majority of its campuses. Prior to the agreement CCI enrolled 72,000 students and received $1.4 billion in federal student aid.

Since that time, Corinthian completed the sale of some 56 campuses to Education Credit Management Corporation in early February. In order to close that deal, ECMC agreed to provide $480 million in forgiveness for current and former students who took out CCI’s high-cost private student loans.

Officials with CCI say that the company has been part of advanced negotiations to sell its Heald College branch and to arrange teach-out programs that would allow its Everest College and WyoTech students in California to continue their education.

However, the company says those efforts proved to be unsuccessful because of a number of state and federal investigations into the college chain. Ultimately it was determined the only option was closing the remaining campuses.

”We 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,“ Jack Massimino, Chief Executive Officer of Corinthian, said in a statement. ”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.“

Consumer advocates were quick to welcome CCI’s decision to cease all operations.

Lauren Asher, president of The Institute for College Access & Success, said in a statement that CCI’s recent actions in continuing to enroll student despite a number of investigations indefensible.

“The message needs to be clear that no school is too big to fail, and that students who are harmed can count on much-needed relief,” she says.

Bloomberg reports that the Dept. of Education will begin reaching out to Corinthian students.

“What these students have experienced is unacceptable,” Dept. of Education Under-Secretary Ted Mitchell said in a statement. “As Corinthian closes its doors for good, the department will continue to keep students at the heart of every decision we make.”

Mitchell tells Bloomberg that discussions with students could include the possibility of loan discharges.

While it’s unclear when or how much relief students might receive as a result of CCI’s definitive collapse, consumer advocates and legislators were quick to speak out, urging the department to protect students who attended the college’s campuses.

Illinois Senator Dick Durbin, whose work on the Senate Health, Education, Labor and Pension committee has included a deeper look at the troubles with for-profit education, said in a statement [PDF] that students shouldn’t be left on the hook for the debt they incurred while attending the school.

“Finally, we see the end of this rotten company, 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,” he said. “Today, I am calling on the Department of Education to reach out directly to students impacted by the Corinthian closings and provide them with information on how they can receive a discharge of their federal student loans.”

Asher, with the Institute of College Access & Success, echoed Durbin’s sentiments, saying in a statement that now-former CCI students should be able to start anew without the burden of costly loans.

“There is overwhelming evidence of widespread fraud at Corinthian,” Asher said. “Nothing can give students back the time they spent trying to improve their lives at Corinthian, but they must be able to start fresh by having their loans discharged. We urge the Education Department to discharge the federal loans of current and former Corinthian students who were defrauded, including those affected by Corinthian’s action today.”

Corinthian’s decision to stop operations at its remaining campuses comes after a sting of recent issues for the company.

Just last week, California Department of Consumer Affairs announced it issued an Emergency Decision demanding that CCI stop new enrollments at several California campuses.

The Bureau issued the order after determining that the CCI schools did not meet the minimum state standards for financial resources. Among the findings was the confirmation that Everest and WyoTech failed to provide the Bureau with current financial statements as part of their annual reports.

Additionally, inspections of the two schools found they were unable to produce the required financial statements after repeated requests by the Bureau.

Before that the Dept. of Education imposed a $30 million fine against CCI over the use of misstated and inaccurate job placement rates to recruit students at its Heald College campuses. As part of that order, the company was required to stop enrollment at Heald campuses nationwide.

Other issues the company has faced include being delisted from Nasdaq and notice from the California Student Aid Commission that it would halt grants to CCI students. Both of those moves came after the company failed to submit required financial statements to both the Securities and Exchange Commission and the student aid commission.
CCI’s obstacles haven’t just been relegated to the U.S.: the company’s Canadian operations closed with little warning to students and filed for bankruptcy in February.

Corinthian Shuts All Campuses, Ending College for 16,000 [Bloomberg]

by Ashlee Kieler via Consumerist