Under close scrutiny from the US Department of Education for fraudulent and conspiratorial practices, the for-profit chain of career colleges, previously valued at $3.4B, has sold 56 of its 107 properties for $24M.
Inside Higher Ed reports
The ECMC Group [(Educational Credit Management Corporation)], a nonprofit organization that runs one of the largest studSent-loan guaranty agencies, announced [November 20] that it will purchase 56 campuses from Corinthian Colleges, a crumbling, controversial for-profit chain.
ECMC will create a nonprofit subsidiary, called the Zenith Education Group, to run the campuses, which enroll more than 39,000 students. The sale price is $24 million, according to a corporate filing from Corinthian. After having absorbed more than half of Corinthian's enrollment and assets, Zenith will operate the nation's largest chain of nonprofit career-oriented campuses.
Corinthian's Everest, Heald, and Wyotech chains include 107 campuses, which in July enrolled 72,000 students and employed 12,000. The company has been attempting to sell 85 U.S. and 10 Canadian locations while gradually closing 12 campuses.
Corinthian has also run afoul of Nasdaq rules again.
Related:
Federal Crackdown On For-Profit Colleges Claims Its First Victory
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Corinthian Colleges, with about 75,000 students in the US and Canada as well as online classes, owns 3 for-profit higher education brands: Everest College, Heald College, and WyoTech schools.
Corinthian receives $1.4B a year from federal education financing programs ($4 out of every $5 of its income).
Late last week, the company appeared headed for permanent closure, but an agreement reached Monday with DoE will allow it to stay in business with Federal oversight.
The US Department of Education has limited its access to federal funds after it failed to provide documents and other information to the agency.
That follows allegations that the company altered grades, student attendance records and falsified job-placement data used in advertisements for its schools.
[...]
The Education Department said that it heightened its oversight of the company after requesting data "multiple times" over the past five months
The company, based in Santa Ana, California, has previously been sued by California Attorney General Kamala Harris
for marketing fraud, arguing that the company mislead prospective students about how its graduates fared in the job market.
Worse, Everest officials paid nearby companies to hire their graduates for just long enough to make the school's statistics look better, then let them go. One Everest campus in Georgia paid companies $2,000 a head to keep Everest graduates on staff for 30 days.
[...]
the company will reportedly get the bridge funding it needs long enough to act on several DOE requests, including closing some of its schools and bringing in an independent auditor for its remaining operations. The DOE is weighing whether or not to reauthorize several Corinthian-owned schools for participation in the federal financial aid system, according to the Associated Press. The company will attempt to sell off significant parts of its 107-campus network.
The US Department of Education reports
The U.S. Department of Education took additional steps [April 14] to protect students and taxpayers and crack down on abuses within the for-profit sector by continuing its enforcement actions against Corinthian Colleges Inc. After a comprehensive review, the U.S. Department of Education has confirmed cases of misrepresentation of job placement rates to current and prospective students in Corinthian's Heald College system. The Department found 947 misstated placement rates and informed the company it is being fined about $30 million.
Specifically, the Department has determined that Heald College's inaccurate or incomplete disclosures were misleading to students; that they overstated the employment prospects of graduates of Heald's programs; and that current and prospective students of Heald could have relied upon that information as they were choosing whether to attend the school. Heald College provided the Department and its accreditors this inaccurate information as well.
The Department has also notified Corinthian it intends to deny Corinthian's pending applications to continue to participate in the Title IV federal student aid programs at its Heald Salinas and Stockton locations. Corinthian has 14 days to respond to the Department's notice, after which the Department will issue its final decision. Moreover, the Department has determined that Heald College is no longer allowed to enroll students and must prepare to help its current students either complete their education or continue it elsewhere.
The "Corinthian 15" debt strikers of February became the Corinthian 100 in late March with students refusing to pay back loans made under fraudulent conditions. Nine states' attorneys general agree that the bad loans should be forgiven.
Cable News Network notes
"Corinthian took advantage of students who were trying to build a better life for themselves and their families" said Massachusetts Attorney General Maura Healey.
[...]Tuition and fees for some of its programs cost more than five times those at other public colleges, according to the [Consumer Financial Protection Bureau]. A bachelor's degree cost up to $75,000 and an associate's was as much as $43,000.
Corinthian was so expensive that many students needed to take out both federal loans and private loans to cover the cost. The college offered its own private loans, which came with interest rates sometimes twice as high as federal loans.
Related:
Federal Crackdown On For-Profit Colleges Claims Its First Victory
Update: Corinthian Colleges Will Sell Half its Campuses to Nonprofit Loan Servicer
(Score: 3, Insightful) by hoochiecoochieman on Friday November 28 2014, @10:53AM
Maybe this is the beginning of the end for for-profit education. I welcome it with open arms.
In my country, private colleges are going bankrupt one after the other, following a boom in the 90s. At that time, they were declared "the future of education". Now they are going down in flames in the middle of financial crimes and rampant corruption. I guess charging excruciating tuition for shit degrees and paying the staff shit salaries wasn't enough. Those on the top of the pyramid are never satisfied.
It's funny that we didn't even have to do anything. The education-mongers choke on their own poison. Just like the financial industry did in 2008. Maybe the "market" actually corrects itself. Too bad it only happens after millions of people's lives are ruined.
Of course, now our neoliberal government is trying to bailout the private education system, purposely ruining the public system so they can "save it" by subcontracting education to private corporations. Of course, those are owned by close friends of the government, or even government members themselves.
When something proves not to work, just repeat it ad nauseam, seems to be the recipe for our neoliberal rulers.
Of course, in the end the problem will fix itself. One of two guys will go to jail, a few will retire and live happily ever after with the millions they managed to send abroad, and millions of people will be left with empty pockets and shit education.
(Score: 2) by GreatAuntAnesthesia on Friday November 28 2014, @11:01AM
> Just like the financial industry did in 2008.
You have a funny definition of "choking on its own poison". As I remember it, the financial giants sucked money out of the markets until they crashed, ruining poor and middle-class lives, then persuaded governments to hand over billions more in taxpayers money, which they immediately stuffed into their back pockets. The only thing they are likely to choke on is gold-plated, cocaine-stuffed caviare.
(Score: 2) by hoochiecoochieman on Friday November 28 2014, @11:19AM
They choked on their own poison. Like a parasite, they sucked their host until no blood remained. Unfortunately, the parasite didn't die along with the host. They were bailed out this time and went on sucking again.
The shit will eventually hit the fan again. At that time, there will be no money left to bail them out. This time, the whole world economy didn't collapse, but the next time it will.
It's funny how greed works. When you have little, you are happy with a little more. If you have too much, you can't stop wanting more, and more, and more. There should be detox clinics for that.
Unfortunately there's plenty of common working people defending the parasites, and feeling their pains. As if they feel the pain of the common man! There's no lack of comments here in SN, defending the creeps. People get what they ask for, I guess.
(Score: 0) by Anonymous Coward on Friday November 28 2014, @12:06PM
The financial implosion was a worldwide event.
One notable country refused to bail out their banksters. [googleusercontent.com] (orig) [zerohedge.com]
The people of Iceland had to tighten their belts for a bit, but they have come out the other side OK. [googleusercontent.com] (orig) [dissidentvoice.org]
Unlike USA, they aren't waiting for the other shoe to fall catastrophically. [googleusercontent.com] (orig) [dissidentvoice.org]
-- gewg_
(Score: 2) by VLM on Friday November 28 2014, @01:43PM
Zenith Education Group
No contact whatsoever with Heathkit.
Zenith bought Heathkit around 1980, and in the usual merger mania is now owned by LG. Yeah, that LG. The story of the Heathkit name and IP is very long and has nothing to do with this Zenith other than being confusingly similar trademarks (In other words they're either going to negotiate with LG or get spanked in court, likely)