Documents Show What The Department Of Education Knew About Corinthian College’s Financial Situation
Career College Central Summary:
The Department of Education has consistently maintained that it “didn’t know” how precarious the financial situation of Corinthian Colleges was when it moved to cut off the for-profit college company’s access to federal funding — leading the to the for-profit college operator’s collapse.
But previously unpublished documents provided to BuzzFeed by the Department of Education show that the department was well aware of many details of the company’s recent financial situation — including Corinthian’s minuscule cash balance and its May 2014 disclosures that it had violated its bank covenants — and was actively trying to obtain more detailed financial information about the company. In a May 13 letter addressed to Corinthian vice president Linda Buchanan, the department detailed all of the troubled company’s financial woes and asked Corinthian for updates on its financial situation, including its liquid cash availability and “projected capital expenditures” and copies of all of the company’s debt covenants.
The Department of Education declined to disclose whether or not it ever received the requested updates, citing an ongoing investigation into Corinthian’s financials, and Kent Jenkins, a spokesman for Corinthian, said only that the company had “responded” to the letter, but could not detail the documents it had provided the federal agency.–Many observers of the industry had been operating on the assumption that the Education Department had somehow missed signs of Corinthian’s collapse that most others were aware of, an idea that the May 13 letter contradicts. Trace Urdan, a senior analyst at Wells Fargo, said that the Department of Education’s apparently detailed knowledge of Corinthian’s financials “definitely mitigates the idea that they didn’t know what they were doing. They apparently knew enough to be asking the right questions.”
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