The beleaguered for-profit college franchise, Corinthian Colleges, Inc., announced today that it was closing its remaining campuses on Monday, including several in the Bay Area.
Officials from Corinthian Colleges said the company is working
with other schools to provide continuing education opportunities for its approximately 16,000 students at its remaining 28 campuses.
The company operates Everest, WyoTech and Heald College in
California with Heald College campuses in San Francisco, Hayward, Concord and San Jose, among others.
The closure comes less than two weeks after the U.S. Department of Education announced it would fine the school $30 million after the agency determined the company misled students about job placement opportunities and loan repayment rates.
U.S. Secretary of Education Arne Duncan called the fine a "wake-up call for consumers across the country about the abuses that can exist within the for-profit college sector."
Education Under Secretary Ted Mitchell described the repeated
misrepresentations as a "blatant disregard not just for professional standards, but for students' futures."
"This is unacceptable and we are holding them accountable,"
Mitchell said in a statement.
Up until this year, Corinthian Colleges was one of the largest
for-profit post-secondary education companies in the United States, according to the federal Consumer Financial Protection Bureau.
The company had more than 100 school campuses across the county with approximately 74,000 students.
Reports of malfeasance began in June 2014, when the Department of Education decided to delay Corinthian's access to federal student aid dollars, according to the CFPB.
As part of an agreement with the Department of Education,
Corinthian began scaling back its operations, despite continuing to enroll some new students, according to the CFPB.
In September, the CFPB sued Corinthian for its allegedly illegal
predatory lending program.
The complaint alleges that Corinthian encouraged and even coerced or "strong-armed" tens of thousands of students into taking private loans to cover their education debts and then aggressively sought repayment.
In internal communications, Corinthian employees described prospective students as people with "low self-esteem" who are "isolated," "stuck" and "unable to see and plan well for [the future," according to court documents.
They also referred to students as having a "[minimal to
nonexistent understanding of basic financial concepts" and poor or no credit history.
The CFPB complaint alleges that employees at the school would pull students out of class in an effort to publicly shame them if they weren't repaying their loans and often withheld diplomas, books, or blocked access to school computers.
Tuition and fees for some Corinthian programs were more than five times the cost of similar programs at public colleges, but according to internal documents obtained by the CFPB, most students came from low-income families and were the first in their families to seek an education beyond high school.
The loan default rate was more than 60 percent, according to the
CFPB. The total outstanding balance for loans held by Corinthian students was more than $569 million when CFPB sued the company, according to the CFPB.
In February, the ECMC Group, which bought a number of Corinthian schools, agreed to acquire some Everest and WyoTech campuses and pay more than $480 million to borrowers of Corinthian's loans.
According to officials at Corinthian, the company was in "advanced negotiations" with several parties to sell Heald College.
Company officials said in a statement the efforts were
unsuccessful because of federal and state regulations and financial penalties.
"We believe that we have attempted to do everything within our
power to provide a quality education and an opportunity for a better future for our students," Corinthian CEO Jack Massimino said in a statement.
"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," Massimino said.