Cal Grants Suspended for Thousands of Students at Troubled Heald College

Monday, February 16, 2015

Around 4,500 students at 10 Heald College campuses in California won’t be getting their Cal Grant awards in a timely fashion, or at all, after their school failed to submit the proper paperwork to the state on time.

The $1 million was held up until the school submits financial documents that were due in December, according to the San Francisco Chronicle. That might take awhile. Heald’s parent company, Santa Ana-based Corinthian Colleges, has been under siege by state and federal officials for more than a year and was forced to sell a big chunk of its 100-plus schools to others in December.

Corinthian held on to Heald, which has campuses in the Bay Area and the Central Valley. The $1 million is small compared to what lies ahead. California Student Aid Commission spokesperson Patti Colson told the Sacramento Bee another $13 million in award money reserved for payment by the end of June was in jeopardy.

Students can still claim their Cal Grants and use them, but it would have to be at another school. The grants range from $2,000 to $11,000. The Wall Street Journal reported that students attending Heald’s campuses in Portland, Oregon and Honolulu aren’t affected.

Corinthian was not shocked and amazed by the commission’s action, but it was “surprised and disappointed,” according to a statement by the college. Corinthian spokesman Joe Hixson told the Journal the college would “vigorously oppose” the commission’s decision.

Corinthian, described by Republic Report’s David Halperin as “one of the most abusive and deceptive for-profit college companies” in the country, sold 56 campuses operating under the names Everest and WyoTech to Education Credit Management Corporation (ECMC) for $24 million. Most of that money was redirected to the U.S. Department of Education to compensate for federal funding used to prop up the school last year.

The California attorney general filed a lawsuit against Corinthian in 2013, charging predatory practices and other illegalities. But the death blow was delivered by the feds last September when they cut off access to federal student loan money. Corinthian, like many other nonprofit colleges, feasts on tuition loans obtained for its students who are overwhelmingly low-income students

A scathing 2012 report (pdf) on for-profit colleges, released by then-U.S. Senator Tom Harkin (D-Iowa), questioned their high drop-out rates, questionable programs and targeting of non-traditional students who piled up loads of debt.

Corinthian was notified by NASDAQ last week that it was being delisted by the stock exchange as of February 17. Apparently the company failed to file periodic reports with the Securities and Exchange Commission (SEC) in a timely fashion.      

–Ken Broder


To Learn More:

California Halts Grants to Corinthian’s Heald Students (by Melissa Korn and Stephanie Gleason, Wall Street Journal)

California Student Aid Commission Halts Payments to Heald College Students (by Alexei Koseff, Sacramento Bee)

Cal Grants Halted at 10 Heald College Campuses (by Kale Williams, San Francisco Chronicle)

California Halts Heald College Tuition Grants for Students (by Katy Murphy, San Jose Mercury News)

Education Dept. OKs Sale of Failing For-Profit Colleges to Debt Collection Company (by Ken Broder, AllGov California)

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