The Department of Education (DOE) has come to an agreement with for-profit Corinthian Colleges, which will result in the selling and in some cases closing of its 90 schools across the country.
The DOE has also imposed a 21-day waiting period on federal student aid payments going to the company, which may cause many schools to close as this makes up 85% of their revenue, writes Kyla Calvert for PBS News.
The Santa-Ana based company which owns the Everest College, Heald College, and WyoTech schools, had been under investigation of the DOE for many years for falsifying grades, student attendance, and job placement after graduation.
What will happen to the company’s 72,000 students?
According to Chris Kirkham for The Los Angeles Times, while some of the company’s schools will be bought out by other companies, the remaining schools will close under a “teach-out” method, where no new applicants will be accepted, but remaining students are allowed to finish out their degrees.
“Students and their interests have been at the heart of every decision the Department has made regarding Corinthian,” said US Under Secretary of Education Ted Mitchell, according to a statement published on the Department of Education’s website. “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 hopes to have sales deals in place within the next six months.
The deal comes as the administration of President Barack Obama has been cracking down on for-profit schools, which are shown to have lower graduation rates and higher student debt than non-profit schools. Corinthian Colleges have shown one of the highest rates of defaulting on loans in the country.
The decision is meant as a warning to other for-profit schools, to change their ways before they are shut down.
“Hopefully this sends a message that no school is too big to fail,” said Pauline Abernathy, a vice president at the Institute for College Access & Success, a policy group focused on student debt issues. “But hopefully it will also encourage the department to act sooner to encourage schools to improve more quickly, so that this kind of situation does not drag out so long.”
Details of the deal are expected to finalize by July 1.
According to the company website, Corinthian Colleges:
Offer short-term diploma programs and associate, bachelor’s, and master’s degrees. Our main program areas include health care, criminal justice, business, information technology, transportation technology and maintenance, and construction trades. In addition, we offer online degree programs that include business, accounting, criminal justice, paralegal and information technology.