For-profit college group to shut down.
Facing heavy losses and a crackdown by government agencies, Corinthian Colleges, one of the largest for-profit operators of trade schools and colleges, will largely cease operating under an agreement with the federal Education Department.
Corinthian, which has about 72,000 students, will make arrangements in the next six months to sell almost 100 schools in the United States and Canada, and it will close a dozen others, the company said in a statement released late Thursday. That appears to cover all of Corinthian's schools, but the company left it unclear whether it would continue to exist in some form or retain any of its current programs.
The agreement "provides a blueprint for allowing most of our campuses to continue serving their students and communities under new ownership,'' said Jack D. Massimino, chairman and chief executive of the company.
But the plan faces a major hurdle: finding buyers. College enrollment has been declining, particularly in the for-profit sector, and several other companies are having financial and regulatory troubles of their own.
When Corinthian shed four campuses in California last year, it had to pay another company to take them. Its other recent attempts to sell schools have found no takers, and in some cases, it closed the campuses instead.
In the first nine months of its 2013-14 fiscal year, Corinthian reported a net loss of $94 million and a cash cushion that shrank to $28 million from $46.6 million. Its efforts to have students with poor credit borrow money from private lenders have resulted in especially heavy losses. Its stock, which had traded as high as $3.21 a share in early 2013, closed on Thursday at 28.4 cents.
The California attorney general, Kamala D. Harris, sued the company last year, charging, among other things, that it had lied to students and investors about job placement rates for its graduates and about its financial condition. For months, the Education Department has demanded job placement data from Corinthian, to no avail, prompting the department to threaten last month to cut off federal money to the company.
Like other for-profit school chains, Corinthian relies overwhelmingly on government funds -- $1.4 billion last year in federal student loans and financial aid to low-income students, out of $1.6 billion in revenue. So a cutoff would have quickly put the company out of business, preventing students from finishing courses and abruptly leaving thousands of people unemployed.
The department and the company have been negotiating a plan to allow Corinthian to wind down its operations gradually. Under the agreement, federal money will continue to flow, but with heightened scrutiny. The department will appoint an independent monitor to oversee Corinthian's operations.
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Jul 5, 2014|
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