For-profit Corinthian Colleges, Inc. reached a deal with the Department of Education to sell or discontinue its programs over the next six months. The deal comes after the Department of Education added a 21-day waiting period to federal student aid payments going to the company on June 12.
The waiting period was imposed because Corinthian was accused of changing grades, falsifying attendance and job placement reports about its students, and marketing its programs inappropriately. The company signaled the delay in payments could lead to its closing last week. According to the Los Angeles Times, federal student aid makes up about 85 percent of the company’s revenues.
The plan to sell or ‘teach-out’ Corinthian programs by the end of the year means the company’s more than 72,000 students in online and on-site programs across the country, won’t immediately be left in the lurch.
“Students and their interests have been at the heart of every decision the Department has made regarding Corinthian,” said U.S. Under Secretary of Education Ted Mitchell, according to a statement published on the Department of Education’s website. “We will continue to closely monitor the teach-out or sale of Corinthian’s campuses to ensure that students are able to finish their education without interruption and that employees experience minimal disruption to their lives.”
In 2012, the 1.5 million students enrolled in for-profit programs accounted for about 8.5 percent of those enrolled in undergraduate college programs across the country, according to the most recent federal data. The federal pressure on Corinthian Colleges comes as the Obama administration has been seen as increasing its scrutiny of the for-profit college sector, which has lower graduation rates and higher student debt and default rates than its non-profit counterparts.
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