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.
A group of six Senate Democrats on Tuesday questioned the White House and U.S. Department of Education's oversight of the finances of for-profit institutions. The senators, who were led by Sen. Tom Harkin of Iowa and Sen. Dick Durbin of Illinois, criticized the department's claim that it was surprised by the precariousness of Corinthian Colleges, which announced it was on the verge of collapse in June, after the department froze its financial aid revenue for 21 days. Corinthian is in the process of dismantling its 107 campuses. The senators asked for the administration to answer questions about its tools for monitoring the solvency of for-profit chains.
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.