Kevin Modany, the CEO of ITT Educational Services since 2007, has announced his resignation. The for-profit chain's share price was battered on Monday, sinking by 46 percent. Investors apparently soured on ITT in part because of news late last week of a collapsed real estate deal. On Friday the company disclosed that a buyer had pulled out of a May agreement to purchase 24 ITT properties for an estimated $119 million. The for-profit, which enrolls 55,000 students, is facing several state and federal investigations, as well as the possibility of tighter financial oversight by the U.S. Department of Education.
For-profit institutions have increased their share of the overall enrollment of student veterans, as well as an increasing portion of revenue from Post-9/11 GI Bill benefits. Those are the findings of a new report from the U.S. Senate's Health, Education, Labor and Pensions Committee's majority staff. Sen. Tom Harkin, an Iowa Democrat and critic of the for-profit sector, chairs the committee.
The report tracked Post-9/11 GI Bill spending since the program's creation, in 2008. Enrollment of veterans at for-profits increased to 30 percent of the total last year from 23 percent in 2009, the report found, despite the fact that the sector's overall enrollments tumbled. The percentage of veterans attending a public institution declined, from 62 percent to 50 percent.
Total spending on the Post-9/11 GI Bill increased to $4.17 billion from $1.75 billion during that period. The for-profit industry's share increased to $1.7 billion from $640 million. In addition, the report said eight of the top 10 institutional recipients of Post-9/11 GI Bill benefits last year were publicly traded for-profit chains.
BioHealth College Inc., which owns for-profit colleges in four cities in California, has filed for bankruptcy, The San Jose Mercury News reported. While the colleges are operating, the U.S. Education Department placed them on "heightened financial monitoring" status, which could slow the flow of federal student aid dollars to the institutions. The colleges used to be owned by Corinthian Colleges, but were sold in 2013. The BioHealth CEO did not respond to requests for comment.
Anthem Education, a 34-campus for-profit chain, appears to be on the verge of shutting down campuses, The St. Louis Post-Dispatch reported. Anthem has notified state officials of layoffs coming soon in Missouri, Texas, Wisconsin and Georgia. A Missouri official said that the three campuses in that state are shutting down. Those campuses have also posted notices that enrollment is closed. The Milwaukee Business Journal reported that a Wisconsin campus is closing. A company spokesman declined to confirm for the Post-Dispatch that campuses are closing, but did say that Anthem is facing a serious cash flow problem. He added that “closure isn’t a foregone conclusion.”
The U.S. Department of Education announced on Friday that Patrick Fitzgerald, a prominent former U.S. attorney from Illinois, will lead the team of outside monitors that will oversee the closure and sale of Corinthian Colleges' 107 campuses. An agreement the feds and Corinthian reached earlier this month required that a monitor have access to the for-profit's finances and other internal controls.
Fitzgerald previously led investigations of two former Illinois governors and into leaks relating to the Valerie Plame controversy. His monitoring team will report directly to the Education Department. The team is tasked with ensuring that students are protected during Corinthian's dismantling, the department said.
This week Pearson introduced a new learning model for competency-based education. The company's seven-step "platform" seeks to help colleges prepare, build and sustain successful competency-based programs. It includes advice on market analysis, curriculum design and using data to evaluate student performance.
A California court on Friday rejected a request by the state's attorney general, Kamala D. Harris, who had sought an injunction to require Corinthian Colleges to disclose more information to prospective students about the company's dismantling. The filing was an addition to a larger lawsuit Harris previously filed against the for-profit chain. That legal challenge includes a wide range of allegations about deceptive marketing and job placement claims. The Superior Court of San Francisco is slated to consider the lawsuit in August.
The U.S. Department of Education failed to reach an agreement with Corinthian Colleges on how to sell or close its 107 campuses, the department said Wednesday. The two sides last month agreed to an initial plan, through which the feds released held financial aid payments to the cash-starved for-profit chain. Announcements of that deal said negotiators would finalize the phasing-out arrangements for Corinthian by July 1. The department said yesterday that the plan remained due by that date.
“While we did not reach an agreement yet with Corinthian officials, we are optimistic that further conversations with the company will produce an acceptable plan in the next few days that protects the interests of students and taxpayers,” said Ted Mitchell, the under secretary of education, in a written statement.
The company said in a statement it continues to work cooperatively with the department and that they expect to have an agreement completed in the next few days.
Mitchell told reporters Wednesday afternoon that there were “no immediate consequences” for missing the July 1 deadline.
“We extended the MOU under which we were operating with them,” he said. “We’re doing a day-by-day extension.”
(Note: this story has been updated to include additional remarks from Mitchell).