Thursday, June 19, 2014
NEW YORK (AP) — Corinthian Colleges, a for-profit education company with about 75,000 students nationwide, warned Thursday that it may fail as it clashes with U.S. regulators over student data.
Corinthian, which owns the Everest College, Heald College and WyoTech schools, said that the U.S. Department of Education has limited its access to federal funds after it failed to provide documents and other information to the agency.
That follows allegations that the company altered grades, student attendance records and falsified job placement data used in advertisements for its schools.
Shares in the company plunged more than 64 percent Thursday.
The Education Department said that it heightened its oversight of the company after requesting data "multiple times" over the past five months. Regulators have grown increasingly concerned about inconsistencies in its job placement claims for graduates.
Corinthian's problems come as student enrollment at schools run by for-profit education companies have been dropping amid heightened government scrutiny of the industry's practices. Earlier this year, the Consumer Financial Protection Bureau filed suit against another company, ITT Educational Services Inc., alleging that it pushed students into high-cost private loans knowing they would likely default. The company denied the charges. Several state attorneys general are also investigating various for-profit education companies.
At Corinthian, the Education Department has now limited the federal student aid funds available to the school and is releasing those funds only 21 days after Corinthian submits student enrollment data, according to a Securities and Exchange Commission filing.
Those funds are available in most cases within one to three days.
The Santa Ana, California, company said that it has sought, but has been refused, additional financing by its lenders.
It's unclear what would happen to its students. It has more than 100 campuses in the U.S. and Canada as well as online classes. Everest and Heald offer programs in the health care, business and computer technology fields. WyoTech trains students on motorcycle repair, automotive technology and air conditioner installation.
A spokesman at Corinthian declined to comment Thursday.
Jorge Rodriguez, 23, expects to graduate in April from a Heald campus in Milpitas, California. He said he likes his school, where he is studying to become a medical assistant or registered nurse, and that the program accommodates his part-time work schedule.
"We haven't heard anything of this," he said. But he called his adviser Thursday after reading an article about Corinthian's troubles. He said his adviser told him that the school's president would be available to answer Rodriguez's questions.
The Education Department's website says that students at schools that close before they complete their degree may be able to discharge federal loans. The department also works to find other options for students in order to finish their education.
According to the Education Department, Corinthian receives $1.4 billion in federal financial aid each year.
Shares of Corinthian Colleges Inc. fell 57 cents to close at 28 cents Thursday. Its stock has lost 84 percent of its value this year.