The CEO and others officials of Fast Train College, a for-profit chain in Florida that closed in 2012, have been indicted on charges of conspiracy and theft of government funds, The Miami Herald reported. The alleged conspiracy involved recruiting students without high school diplomas, enrolling them, and coaching them on how to obtain federal student aid for which they were ineligible. According to the indictment, the college received more than $6 million in this way. Those indicted could not be reached for comment.
A study released Monday by the National Bureau of Economic Research suggests that the type of college one attends can have an impact on employment odds. The study used fictional résumés to measure the odds of getting a call-back for various jobs, enabling comparison of people with identical backgrounds except for the institutions they attended. Those with a bachelor's degree in business from a for-profit online institution were 22 percent less likely to receive a callback from a potential employer than those who had attended non-selective public institutions. The gap disappears, however, for for-profit institutions that have a physical campus and a strong local presence. An abstract of the study is available here.
Corinthian Colleges said Friday that the U.S. Department of Justice is investigating whether the company defrauded the federal government.
The investigation, under the False Claims Act, concerns “allegations related to student attendance and grade record manipulation, graduate job placement rate inflation and non-Title IV funding source misrepresentations,” the company told investors. The disclosure comes as Corinthian is also facing three criminal probes by the Department of Justice. Federal prosecutors in California, Florida, and Georgia have all issued grand jury subpoenas to the company. Corinthian is also in search of sources of liquidity as it seeks to sell off and close its campuses as part of an agreement with the U.S. Department of Education.
Submitted by Paul Fain on August 28, 2014 - 3:00am
Education Management Corporation, a large, publicly traded for-profit chain, announced on Wednesday that it had brokered a financial restructuring agreement with creditors that own 80 percent of the company's debt. In a written statement the company said the restructuring would reduce its funded debt by an estimated $1.1 billion.
Submitted by Paul Fain on August 26, 2014 - 3:00am
Corinthian Colleges, the struggling for-profit chain that is selling or closing its 107 campuses, announced Monday in a corporate filing that the U.S. Consumer Financial Protection Bureau (CFPB) appeared willing to discuss a possible settlement. The CFPB has been investigating the company. Last week it sent a letter Corinthian alleging violations of the Dodd-Frank Act and the Fair Debt Collection Practices Act, the company said.
The CFPB said it would require several conditions as part of a possible settlement, according to Corinthian. They would include ceasing the sale or transfer of private student loans, providing prospective students with more information about the company's financial problems, and providing the bureau with details about the possible sale of Corinthian's assets. The company reported that it had sold a portfolio of student loans for $19 million one day before receiving the letter from the feds.
John Sperling, founder of the University of Phoenix, died on Friday at the age of 93. The announcement was made by the Apollo Education Group, which grew out of the company Sperling founded in 1973.
The obituary noted Sperling's pride in taking on establishment higher education. “I was totally unprepared for the level of resistance and the passion of that resistance by professors and university administrators," he wrote in his autobiography, Against All Odds. Sperling retired as chair of the company's board in 2012.