Corinthian Colleges announced on Monday that it had reached an agreement with the U.S. Department of Education that is designed to keep the for-profit chain afloat long enough to sell off and shutter its campuses in an orderly fashion.
The struggling Corinthian faces a dire cash shortage, due in part to decision by the feds last week to put a 21-day hold on payments for federal financial aid and grants. While the hold remains in place, the department agreed to release $16 million in payments immediately. That was the minimal amount necessary to keep Corinthian from going bankrupt this week, according to a corporate filing.
Last month the company said it was considering "strategic alternatives" such as the sale or merger of some of its operations. That process appears to have progressed, according to the preliminary terms of a transition plan Corinthian is working on with department. The company agreed to hire an outside monitor as it seeks to sell or "teach out" its 107 campuses within about six months.
Corinthian owns Heald College, WyoTech and the Everest College and University chains. It enrolls 72,000 students. The company will continue to enroll new students under the agreement. However, Corinthian agreed to freeze enrollments at institutions it is closing down, once the company and the government determine which campuses those will be.
"Throughout several days of intensive discussions with the department, our goal has been to protect the interests of our students, 12,000 employees, taxpayers and other stakeholders," said Jack Massimino, the company's chairman and CEO, in a written statement.
The department said it put a hold on Corinthian's federal payments because the company had been slow to respond to several information requests over concerns about the company's marketing practices. Corinthian agreed on Monday to provide the outstanding information in a timely manner.