The market value of Corinthian Colleges, the largest for-profit college group in the state, has plummeted from $3.2 billion in 2004 to $26 million. But the real losers are probably the 72,000+ students who are scrambling to get their money back and find another school to accept them and, perhaps, their already-earned class credits.
Responding to what seemed to be a death blow two weeks ago when the U.S. Department of Education froze payment of the student grant and loan money that has been its life blood, Santa Ana-based Corinthian announced last week that it had reached a deal with the agency for an “orderly transition for its 107 campuses and online programs.”
How orderly remains to be seen. Although Corinthian CEO Jack Massimino said in a prepared statement that, “We are pleased to have reached an agreement,” it is doubtful the students and 12,000 employees at its schools in the U.S. and Canada feel the same way. Credits from for-profit institutions aren’t usually transferable to a community college or university.
In exchange for the government temporarily turning the money spigot back on, a monitor from the Education Department will oversee the winding down of operations. Corinthian, which is the parent company of Everest Institute, Everest College, WyoTech and Heald brands, has 24 campuses in California.
The for-profit college industry is having a tough time. A scathing report (pdf) by U.S. Senator Tom Harkin (D-Iowa) in 2012 ripped 30 for-profit operations for their high drop-out rates, questionable programs and targeting of non-traditional students who piled up loads of debt.
Corinthian has six months to find buyers for those campuses that aren’t closed outright. Corinthian’s statement said it would “teach out” 12 schools. For those students not proficient in double-speak, that means the schools are closing. Students who enrolled at those schools during the last two weeks can receive a full refund.
Corinthian had to pay other schools to take four campuses it shed last year in California for financial reasons. It has closed others when there were no takers.
California Attorney General Kamala Harris sued Corinthian last October, accusing it (pdf) of “predatory” activities that “targeted some of our state's most particularly vulnerable people—including low income, single mothers and veterans returning from combat.”
Corinthian schools allegedly used “deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs.” The same misrepresentations were also made to investors and accrediting agencies, the attorney general alleged.
Low-income students and military veterans are prime recruiting targets of for-profit colleges because they have access to state and federal education financial assistance. Federal money accounts for $1.4 billion out of Corinthian’s $1.6 billion annual revenue, according to the New York Times.