Feds Bar New Students at For-Profit Heald Colleges and Fine Parent Corinthian $30 Million

Wednesday, April 15, 2015
(photo: CBS Sacramento)

The federal government moved to shut down the nation’s most infamous for-profit institution of higher education when it fined what’s left of Santa Ana-based Corinthian Colleges $30 million and forbid its 10 remaining schools, operating as Heald College in California, Hawaii and Oregon, from enrolling any more students.

The U.S. Department of Education announced on Tuesday it had found 947 instances of Corinthian misstating its placement rate of students after graduation, information used in recruitment that current students probably relied on in choosing the school.

The department has also said it plans to deny Corinthian’s pending applications to continue participation in the Title IV federal student aid programs at its Heald Salinas and Stockton locations. Corinthian is expected to help students transition away from Heald schools and has 14 days to legally respond.  

Corinthian spokesman Joe Hixson said in a statement, “These unfounded, punitive actions do nothing to advance quality education in California, but would certainly shatter the dreams and aspirations of Heald students and the careers of its employees.”

At last count, there were 4,500 of them. Corinthian was once one of the nation’s largest for-profit college chains. A lot of kids accumulated a lot of debt and wasted a lot time for nothing of value. The U.S. Consumer Financial Protection Bureau called that predatory lending and sued.

Corinthian 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, operating under the names Everest and WyoTech, to others in December.

The press release from the federal education department took credit for quick action when “initial questions about Corinthian Colleges' job placement rates were raised in January 2014.”

Some of those “initial questions” were asked in a lawsuit filed by the California attorney general against Corinthian in October 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.

The California lawsuit followed by one year a scathing report (pdf) on for-profit colleges, released by then-U.S. Senator Tom Harkin (D-Iowa), which questioned their high drop-out rates, questionable programs and targeting of non-traditional students who piled up loads of debt. Corinthian, like many other nonprofit colleges, feasts on tuition loans obtained for its students, who are overwhelmingly from low-income families.

The department said Heald was quite creative in the way it juiced the placement numbers. For instance, “Heald paid companies to hire graduates for temporary positions as short as two days, asked them to perform tasks like moving computers and organizing cables, and then counted those graduates as ‘placed in field.’ ”

In another case, “One campus classified a 2011 graduate of an Accounting program as employed in the field based upon a food service job she started at Taco Bell in June 2006.” According to Heald’s own data, more than one-third allegedly were placed in jobs months before they graduated and more than a quarter allegedly started work around 18 months before graduation.

Last week, attorneys general from nine states wrote a letter to U.S. Education Secretary Arne Duncan asking that federal loans owed by students at Corinthian schools be forgiven. The move was not without prompting. The “Corinthian 15,” a group of students who refused to pay their debt in February, has grown into the “Corinthian 100.” Its members have had face time on television and with lawmakers and education administrators in D.C.

–Ken Broder  


To Learn More:

Heald College Fined, Barred from Enrolling More Students After Federal Investigation (by Katy Murphy, San Jose Mercury News)

Corinthian Colleges Hit with $30-Million Fine over False Job Placement Rates (by Chris Kirkham, Los Angeles Times)

State Attorneys General Call on Feds to Forgive Fraudulent Student Loans (by Jon Queally, Common Dreams)

The “Corinthian 100” Are Protesting Their Student Debt, with Plenty of Support (by Annie Wood, Generation Progress)

Cal Grants Suspended for Thousands of Students at Troubled Heald College (by Ken Broder, AllGov California)

U.S. Department of Education Fines Corinthian Colleges $30 Million for Misrepresentation (U.S. Department of Education)

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