Fallen Giant

Career College Central summary:

  • The Obama administration now can claim partial credit for the demise of one of the largest for-profit college chains. And both critics and supporters of the sector expect the federal scrutiny to continue.
  • “I have no reason to be optimistic about an era of constructive collaboration,” said Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, which is the industry’s primary trade group. He said for-profits are facing a “regulatory assault” by a White House that is “ideologically opposed to this sector.”
  • On Monday the U.S. Department of Education and Corinthian Colleges announced the bare bones of a deal to sell off and close all of the publicly traded for-profit’s 107 campuses. In exchange the department freed up $16 million in frozen payments to the company, which owns the Heald College, Everest and WyoTech chains.
  • The news came four days after the department placed Corinthian on “heightened cash management” status over concerns about the company’s allegedly sluggish and incomplete response to a broad range of information requests.
  • A department spokeswoman said 454 institutions were operating under that sanction as of March. But Corinthian’s status came with an additional wrinkle — the department included a 21-day delay on all payments to the company for federal aid programs. That penalty, which sources said was unique in recent history, meant Corinthian faced bankruptcy within days.

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