Corinthian Colleges, Inc., today announced the effective end of all operations. Given the wide public interest in this matter, and our Departments involvement in it, I wanted to provide some background and explain what has happened, as I have done in the past.
Corinthian’s closure follows a series of enforcement actions by this Department and by states aimed at protecting students and safeguarding the interests of taxpayers. The Department took action in June 2014, when Corinthian failed to respond to the Departments repeated requests for answers about questionable practices, including concerns that Corinthian was using false and misleading job placement data to market its schools and recruit students, and that it might be changing student grade and attendance data to hide performance problems. To mitigate further damage, the Department intensified oversight of Corinthian, ultimately leading to an agreement that put Corinthian on the road to closure. As first step in that process, Corinthian sold 56 Everest and WyoTech brand campuses in November 2014.
As Corinthian was attempting to manage its closure plans, the Department’s enforcement actions against the school continued. On April 14, the Department announced the results of one portion of its investigation – findings regarding Corinthian’s Heald campuses as it related to placement rate reporting. Corinthian’s misrepresentations regarding placement rates were serious, and the Department initiated a fine action of approximately $30 million against the school.
At the time the Department first took action on Corinthian, approximately 72,000 students were enrolled; today, about 15,000 remain at 30 campuses under the control of Corinthian in five states. The closure decision was made by the company, following Corinthian’s failure to find a buyer for the remaining campuses willing to abide by conditions put in place by the Department to protect students, borrowers and taxpayers.
These actions are part of a larger effort by the Department of Education to take strong steps to protect the interest of students and taxpayers. The Obama Administration has led unprecedented efforts to protect consumers from predatory career colleges. It has established new gainful employment regulations to hold career training programs accountable and ensure that students are not saddled with debt they cannot repay. These regulations ensure that programs improve their outcomes for students or risk losing access to federal student aid. Last year, the Department announced a new federal interagency task force to help ensure proper oversight of for-profit institutions.
Taking strong actions on Corinthian has been an important part of that effort. Given today’s announcement by Corinthian, our first and most pressing concern is for the students who were enrolled. We will contact Corinthian students about their options, and will post additional information on our website. In addition, the Department will send staff from our Federal Student Aid team to as many campuses as possible to talk directly with students. We are working with state community college systems to ensure that students have options to continue their education. Students at schools that have closed may be eligible for closed-school loan discharges; students who were enrolled at Corinthian in the last 120 days will receive information about their options from the Department and from loan servicers.
We will do everything we can to ensure that Corinthian makes good on its obligations to students and taxpayers to the extent possible. In addition, we encourage Corinthian students to pursue debt relief with their state, especially as many states have tuition recovery funds. In all of this work, we ask states to prioritize students and their educational best interests.
As Secretary Duncan has said, we will continue to hold the career college industry accountable and demand reform for the good of students and taxpayers. We hope Congress will join us in that effort.
Students seeking better life options should be assured that their investments will pay off in increased knowledge, skills, and opportunity. As Corinthian closes its doors for good, the Department will continue to keep students at the heart of every decision we make and will communicate with Corinthian students about all their options going forward. What these students have experienced is unacceptable and we look forward to working with Congress in an effort to improve accountability and transparency in the career college industry. A college education remains the best investment a student can make in his or her future, and this Administration will continue to work to make a college degree affordable for all students, to hold colleges accountable, and to safeguard the interests of taxpayers.
Ted Mitchell is the Under Secretary of Education