WASHINGTON – Corinthian Colleges cancelled classes Monday and shut down all of its remaining 28 ground campuses, displacing about 16,000 students, less than two weeks after the Education Department announced it was fining the for-profit institution $30 million for misrepresentation.
The Santa Ana, California-based company said it was working with other schools to help students continue their education by making transcripts available and co-ordinating with other educational institutions to accept them. The closures include Heald College campuses in California, Hawaii and Oregon, as well as Everest and WyoTech schools in California, Arizona and New York.
Corinthian was one of the country’s largest for-profit educational institutions. It collapsed last summer amid a cash shortage and fraud allegations.
The Education Department contends that Corinthian failed to comply with requests to address allegations of falsifying job placement data and altering grades and attendance records. It agreed to sell or close its campuses under pressure from the department.
Students who attend a school that closes while they are enrolled may be eligible to have their federal loans forgiven. Ted Mitchell, the undersecretary at the Education Department, said in a statement that the department “will immediately begin outreach to Corinthian students to review all their options, which may include loan discharges for students whose school closed.”
The Education Department estimated that forgiving the federal student loans for all the current students would cost taxpayers a maximum $214 million.
Sen. Elizabeth Warren, D-Mass., Rep. Elijah Cummings, D-Md., and four other senators in a letter Monday encouraged the department to “take immediate action to identify and inform students with loans eligible for relief that they may qualify for discharge or cancellation.”
Earlier in April, the department fined subsidiary Heald College, alleging the school had shown a pattern of falsifying post-graduation employment data. In one instance, the company’s Honolulu campus declared a student had found work in her chosen field of accounting, even though administrators knew she was working at Taco Bell, the department said.
Most of the company’s former schools have been sold, and Corinthian attempted to sell Heald as well but was blocked by California attorney general Kamala Harris’ refusal to provide prospective buyers with a release from liability.
The company said Sunday it had been in “advanced negotiations” with several parties to sell the 150-year-old college and allow outside partners to let Everest and WyoTech students continue their education but was unsuccessful.
“Unfortunately, the current regulatory environment would not allow us to complete a transaction with several interested parties that would have allowed for a seamless transition for our students,” Corinthian CEO Jack Massimino said in a statement.
The company also defended its work, saying its graduation and job placement rates “compared favourably with community colleges” and that many of its students hadn’t been able to get their needs met at a traditional higher education institution.
“Neither our board of directors, our management, our faculty, nor our students believe these schools deserved to be forced to close,” Massimino said.
A group of current and former Corinthian students have already petitioned the Education Department to waive their federal student debt based on the alleged misconduct. To highlight their plight, several have gone on a loan repayment “strike” and refused to pay back what they owe to the government.
Many of these students previously attended a Corinthian school or their campus was sold, so it is more of a challenge to get their loan debt forgiven.
According to the company’s filings, all of the schools generated $1.2 billion government loans in the final year.