More Time for Corinthian
- Feds and Corinthian agree to a plan for the for-profit's closure, but questions remain
- For-profit chain works with feds on phase-out plan
- Corinthian's failure (and U.S. role in it) fuels for-profit critics
- Major for-profit chain faces bankruptcy as feds turn up heat
- Corinthian's failure could cost the federal government $1.2 billion
(Note: A spokeswoman for the Education Department said Tuesday morning that the deadline remains in place and that the plan is due today.)
The U.S. Department of Education apparently has revised its July 1 deadline to reach an agreement with Corinthian Colleges on a plan to sell or close the for-profit chain's 107 campuses and online programs.
Corinthian is facing a severe cash crisis, due in part to a freeze the department last month put on the company's federal aid payments. Then, on June 23, the feds and Corinthian announced a short-term deal, through which the company received $16 million in released payments in exchange for agreeing to work on a phasing-out plan. However, an announcement on the department's website about that preliminary agreement has now been edited, having dropped "no later than July 1" for the final plan's deadline.
"Corinthian is expected to submit details of the plan to the U.S. Department of Education," the statement now says, "and we will update this announcement with the details of the plan in the near future."
The new ambiguity about Corinthian's fate is certain to draw criticism from consumer advocates, California's attorney general and a dozen Democratic U.S. senators, who have called for a halt to the company's recruitment and enrollment of new students. The department, however, has said it is seeking to minimize disruption to Corinthian's 72,000 students. The for-profit said it would struggle to find buyers if new enrollments are suspended. In addition, the federal government could lose as much as $1.2 billion on students' discharged loans if Corinthian shuts down.
The company also announced on Monday that its creditors had freed up an additional $9 million in funding. The banks had held that money after the department froze its payments.
Corinthian owns the Heald College, Everest and WyoTech chains. Experts have said that Heald, which holds regional accreditation, is likely the most valuable to a potential buyer. In a corporate filing Monday the company said its board had voted to sell Heald. The chain enrolls about 13,000 students at its 12 campuses, which are located in California and in other Western states.