Corinthian Colleges is officially shutting down all of its remaining 28 ground campuses, displacing about 16,000 students. The action comes less than two weeks after the U.S. Department of Education announced it had fined the for-profit institution $30 million for misrepresentation. According to the Colleges’ latest SEC filings, their schools generated $1.2 billion in government loans last year.
Breitbart News reported two weeks ago that with the value of outstanding student loans soon to exceed this year’s entire $1.477 trillion in federal income tax payments, the student loan repayment default rate has leapt to 27.3 in 2014 from 15.8 percent in 2010.
The Santa Ana-based for-profit college company has been selling off or closing its 100-plus campuses since June. The shut-down followed the filling of a $500 million lawsuit by US Consumer Financial Protection Agency alleging that Corinthian continued to make loans to students whose default rates were “consistently extremely high”–i.e. greater than 60 percent for loans more than 3 years old.
Corinthian was one of the country’s largest for-profit educational institutions. It collapsed last summer amid a cash shortage and fraud allegations. The US Education Department contends that Corinthian failed to comply with requests to address allegations of falsifying job placement data and altering grades and attendance records.
For-profit colleges are required to abide by a law known as the “90:10 rule” that prohibits more than 90 percent of a for-profit’s revenues coming from federal student loan programs. From an average of 60 percent a decade ago, for-profit schools now average 80 percent federal funding. Corinthian was known to be close to 90 percent.
Earlier this month, Corinthian-affiliated Heald College was fined after showing an alleged pattern of falsifying post-graduation employment data. In one instance, the company’s Honolulu campus declared a student had found work in her chosen field of accounting, even though administrators knew she was working at Taco Bell, the Education Department said.
Corinthian, which has been operating colleges and training programs under the names Everest College, Heald, WyoTech, and QuickStart Intelligence, said it was working with other schools to help students continue their education. The closures include Heald College, as well as Everest and WyoTech schools in California.
In a statement, Corinthian CEO Jack Massimino said: “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.”
Massimo stated that Corinthian’s graduation and job placement rates “compared favorably with community colleges” and that many of its students hadn’t been able to have their needs met by traditional institutions of higher learning. He added, “Neither our Board of Directors, our management, our faculty, nor our students believe these schools deserved to be forced to close.”
Corinthian sold most of its former schools, but California attorney general Kamala Harris’ refusal to provide prospective buyers with a release from liability for past actions blocked the disgraced firm’s “advanced negotiations” with several parties to sell the 150-year-old Heald College and allow outside partners to let Everest and WyoTech students continue their education.
A group of current and former Corinthian students are petitioning the US Department of Education to waive their federal student debt based on alleged misconduct. The students claim that the department facilitated “widespread deception throughout Corinthian Colleges’ student recruitment system” through a “sophisticated scheme to bilk thousands of low-income students of their dreams, while leaving taxpayers to foot the bill. Now, the Department relentlessly pursues Corinthian borrowers for repayment of their federal loans.”