July 4 (Bloomberg) -- Students at Corinthian Colleges Inc. campuses expressed relief that they will be able to complete their studies as the for-profit company winds down operations either by selling campuses or shuttering them.
“I am beyond excited that we are staying open for at least long enough for everyone to finish what we have started,” said Rene Conley, 31, a practical nursing student at Corinthian’s Everest campus in Grand Rapids, Michigan. “Some will be worried about how this is going to look on a resume. I can only hope prospective employers won’t hold this against hiring us.”
Under an agreement reached with the Education Department last night, Corinthian, which has 72,000 students, said it will put 85 U.S. schools up for sale as well as its campuses in Canada, and gradually close 12 other U.S. sites as students finish programs. The agency has said it took action after the Santa Ana, California-based company failed to address allegations of falsifying job placement rates, grades and attendance at some of its schools.
Corinthian will get $35 million in student aid from the department to continue classes for students who choose to stay through the “teach-out” period and will set up a fund to give refunds to those that don’t, according to an agency statement. An independent monitor will oversee the process. Corinthian also owns the Heald and WyoTech brands.
“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,” Chief Executive Officer Jack Massimino said in the statement. “It also provides a blueprint for allowing most of our campuses to continue serving their students and communities under new ownership.”
Corinthian, which has denied the allegations it falsified grades and job placement rates, said it will provide more details about the plan in a filing Monday with the U.S. Securities and Exchange Commission. It didn’t identify schools earmarked for closure in its statement last night.
“I have 48 days left and have put in far too much to start over,” said Nora Jacobson, 28, also a practical nursing student in Grand Rapids, Michigan.
Still, Jacobson, who called her program and instructors “fabulous,” said it was frustrating that the school failed to notify students early on about what was happening and when they finally did, “they said just enough to keep us at bay.”
“Corinthian should have been honest with everyone from the beginning, and the stress and worry it has caused so many is unfair.”
Tytana Sallay, a dental assistant student at the Everest outpost in Bedford Park, Illinois, was stunned to find out yesterday about Corinthian’s predicament, saying she didn’t recall any warnings from her school. The 20-year-old mother of an 18-month-old boy said she lost her job in January and is depending on the program to get her back on track.
“I need to do something quick that will last me a long time, like a career, and this is it,” said Sallay, of Chicago, who will finish her classwork next month and begin a two-month “externship” at a dental office.
Corinthian’s demise accelerated on June 19, when the Education Department imposed a 21-day waiting period for the company to draw on the federal student aid that accounts for almost all its revenue. Even with federal money, the company said it wouldn’t be able to fund operations without additional bank financing, which it said it has been unable to obtain.
For-profit colleges are under increased scrutiny from Congress and the U.S. Education Department for their recruitment practices and student borrowing. Corinthian is under investigation by 20 states, the Securities and Exchange Commission, the Consumer Financial Protection Bureau and the Justice Department.
Corinthian’s market value has plummeted to about $25 million from its high of $3.2 billion in 2004. The company’s shares have tumbled 84 percent this year. They gained 5.2 percent to 28 cents yesterday in New York.
While students may feel relief they can finish their programs without disruption, some have questioned whether their credentials will carry any value.
Andrea Zahn, 57, of Torrance, California, is slated to graduate in late August from a medical billing program at Everest in Gardena. Her goal is to prepare for retirement after a series of jobs driving trucks, fishing and working in a grocery store.
“What really gets me is if I put in this amount of time and their reputation is worthless, where does that leave me?” Zahn said. “This was the thing to solidify that I could work toward retirement.”
To contact the editors responsible for this story: Lisa Wolfson at firstname.lastname@example.org Chris Staiti