BLOOMBERG BUSINESS: Troubled For-Profit College Gets a Savior With Its Own Checkered Past
Career College Central Summary:
Corinthian Colleges, the for-profit chain under investigation for misleading students and faking job placement records, has a savior. The Educational Credit Management Corp. announced Thursday it plans to buy 56 of troubled Corinthian Colleges’ (COCO) 107 campuses for $24 million—quite a deal, considering the chain was worth $4.2 billion in 2003.
But ECMC, as it’s called, has had troubles of its own. The nonprofit’s primary business is as a guarantor of student loans; it collects on the loans it guarantees. It also runs a secondary business, in which it aggressively fights borrowers in court when they try to offload student loans in bankruptcy. The deal “raises great questions about their purposes,” says Representative Steve Cohen, a Democrat from Tennessee, citing ECMC’s “dubious or questionable tactics” and the predatory practices of the for-profit college industry. “There’s a stench that’s out there above this whole area, and the merger.”
ECMC’s approach has come under fire before. In a May letter to Education Secretary Arne Duncan, six members of Congress protested ECMC’s record of “aggressively challenging debtors’ efforts” to get debt relief. A New York Times report this year detailed the company’s “ruthless tactics” in denying borrowers bankruptcy relief, including telling a woman caring for her dying husband that buying him McDonald’s (MCD) meals counted as a luxury purchase.
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