Under an agreement with the U.S. Department of Education, Corinthian Colleges will put 85 of its U.S. campuses up for sale and close the remaining dozen. The for-profit college chain operates campuses under the names Heald, Everest and WyoTech. It has more than 70,000 students across North America. It's the largest-ever college, by enrollment, to be shut down in this way.
It all started in January when the U.S. Department of Education asked the company to provide detailed records, including Social Security numbers, job placement results, and attendance and grade changes, of students. This was part of compliance with federal regulations designed to make sure that colleges that don't offer a good value to students, don't get student aid money.
When Corinthian didn't fully respond, in June, the Department of Education placed a three-week hold on financial aid payments to Corinthian. The cash freeze was a big problem for the college, which had underlying financial difficulties. Inside Higher Ed reported in May that the college faced closing off or selling its business, with both enrollment and revenue slumping.
"We are pleased to have reached an agreement with ED that helps protect the interests of our students, employees and other stakeholders," Jack Massimino, Corinthian chairman and chief executive officer, said in a company press release. "This agreement allows our students to continue their education and helps minimize the personal and financial issues that affect our 12,000 employees and their families. It also provides a blueprint for allowing most of our campuses to continue serving their students and communities under new ownership."
Current students have a number of choices. For those who stay on at campuses that are closing, the Department of Education will release enough money to allow the college to "teach out" or enable them to finish their degrees. Some students will also be offered refunds or the opportunity to transfer, and their loans may be discharged.
The problems in the for-profit college sector are wider than Corinthian. They come both from market forces and from the government. For example, the Consumer Financial Protection Bureau is suing ITT Educational Services, a chain with 135 campuses and 55,000 students in 40 states. The CFPB's allegations include predatory lending and misleading students about their job prospects. ITT has filed a motion to dismiss this lawsuit.
STEVE INSKEEP, HOST:
One of this country's largest for-profit college chains is in the process of selling or shutting down scores of campuses and online programs.
RENEE MONTAGNE, HOST:
Corinthian Colleges has faced financial trouble since federal education officials looked at the company's records. They saw enrollment and career placement data they didn't like, and they froze access to federal student aid dollars.
INSKEEP: We've been asking how some of Corinthian's more 70,000 students are affected. In a moment, we have a report for member station WGBH in Boston.
MONTAGNE: We start with reporter John O'Connor at WLRN in Miami.
JOHN OCONNOR, BYLINE: Corinthian has a dozen schools in Florida. One is Everest University in Pompano Beach, just blocks from the Atlantic Ocean. The sun is shining, wind rustles the palms, and Joshua Giannos (ph) has just signed up for a course in business administration.
JOSHUA GIANNOS: I'm looking for a career, yes. I'm looking for a career, and I'm looking for ways for experience in the field, so I have knowledge when I start my own business, you know, someday.
OCONNOR: Giannos is 25 and heard an ad for Everest while applying for a job at Costco. What he hasn't heard, is that Everest's parent company Corinthian is selling this Pompano Beach campus and 84 other schools across the U.S.
GIANNOS: To me, it seems like a solid place to go to. I'm trusting them in helping me out.
OCONNOR: It looks like business as usual here at the eight-story office building, where a sign in the window still reads, Everest University - Changing Students' Lives.
KENT JENKINS: Students are in class. Faculty and staff are at work.
OCONNOR: Kent Jenkins, a spokesman for Corinthian Colleges. Jenkins says both Corinthian and the U.S. Department of Education want no disruption for students during the sale.
JENKINS: We want to do everything we can to make sure that all our students are able to complete their studies, and to do that with a minimum of disruption.
OCONNOR: That includes continuing to recruit new students like Giannos. Jenkins says, maintaining enrollment will help attract a buyer.
Corinthian is selling its campuses as part of a deal with the U.S. Department of Education. The agency accused the company of fraud, and restricted federal financial aid to Corinthian. The company soon ran out of cash. The government has been accused of attacking the entire for-profit college industry. Under secretary of education Ted Mitchell says that isn't the case.
TED MITCHELL: We will continue to work with individual colleges like Corinthian when the circumstances are required. But I have - I have no sense that this is the beginning of a trend.
OCONNOR: Corinthian plans to sell its campuses within six months. Spokesman Kent Jenkins says, the firm may still return to education.
JENKINS: Will there be a company at the end of this process? I think that that's - that's depending on the transactions and how they're structured. It's certainly a possibility.
OCONNOR: Meanwhile, Florida's attorney general is investigating claims that Corinthian misled students, or sold them worthless degrees. Several other states including Kentucky, Idaho, and Massachusetts, are also investigating the company.
For NPR News in Miami, I'm John O'Connor.
KIRK CARAPEZZA, BYLINE: And I'm Kirk Carapezza in Massachusetts, where Corinthian has two campuses. One is in Boston's Brighton neighborhood, where Corinthian runs the Everest Institute.
Shakia Arnold just stepped off the train on her way to class. The 30-year-old is halfway through her dental assistant program. And she says, when she first heard Everest Institute was for sale, she was nervous.
SHAKIA ARNOLD: I'm really not a school person, so once I got adjusted to the school, I didn't want change. I heard some people were going to be transferred to the Chelsea campus, and I just wanted to stick it out with my instructor, so that was my main focus - is to stay with who I've been with throughout the year.
CARAPEZZA: Under the deal between Corinthian and the Department of Education, Arnold should be able to finish her nine month program. Unlike the company's campuses in Florida which will be sold, the schools here in Boston will close after students finish their degrees.
ARNOLD: Once they told me that they are still going to stick it through until everybody is done with their sessions, I was happy.
CARAPEZZA: Another student here is 20-year-old Dolores Crawford. She's pregnant, and working toward a medical assistant degree while working nights at Toys 'R' Us. She says, the school told her she'll have to go to a different campus for job placement help.
DOLORES CRAWFORD: And that's not convenient for, especially me, and other people that don't have a car, that have kids - and like, it's not convenient.
CARAPEZZA: Crawford's paying $21,000 for her degree here. $13,000 of that is in loans. Gave Finley is 49 years old, unemployed, and homeless, and took out $12,000 in loans to pay for her dental assistant degree.
GAVE FINLEY: If I'd have known that, I would've never invested my money in it. You know, I could've went someplace else.
CARAPEZZA: Like most students here, she heard about Everest through TV ads, like this one.
(SOUNDBITE OF TV AD)
UNIDENTIFIED MAN: Make this your year - pick up the phone and get on the road to a better future!
CARAPEZZA: But Finley says, she doubts whether her degree will prepare her for a job.
FINLEY: We have no digital equipment. The mannequins that we're supposed to be working on, none of them work. None of the machines work. We don't have half the equipment we're supposed to have. They don't even teach you the basics of what you're supposed to know here.
CARAPEZZA: And without a job, she's not sure how she'll pay back her federal student loans. For NPR News, I'm Kirk Carapezza, in Boston. Transcript provided by NPR, Copyright NPR.