On Tuesday, a group of U.S. Senators expressed concern about the financial stability of ITT Educational Services Inc. and other for-profit educators.
With a federal investigation of University of Phoenix owner Apollo Group Inc. presumably underway, ITT facing the resignation of its chief executive officer and a recent real estate deal gone bad, and Corinthian Colleges meeting its demise at the hands of the U.S. Department of Education looming over all, the natural question on the minds of students and investors in for-profit schools is likely, "Will my school be next?"
But could your school really become the next Corinthian? Here are four reasons to believe otherwise.
1. There may be safety in numbers
Department of Education records show that more than 23 companies that enroll 4,000 or more students have financial integrity scores of failing or close-to-failing. With so many institutions in financial danger, perhaps there’s safety in numbers, and federal officials can’t afford to shut down other for-profit schools because of the number of students who would be tossed out.
2. Corinthian’s demise was an accidental consequence
Additionally, the Department of Education let it be known, unofficially, that it did not realize that freezing Corinthian’s federal funding for 21 days would make the company decide to shut down. If federal education officials truly didn’t shut down Corinthian intentionally, they may be less likely to take that path with other for-profits — in part because it could be seen as a repeat mistake, and officials may be afraid of looking incompetent.
3. Your school may be too big to fail
Undoubtedly, the sheer number of students (70,000) affected by the Corinthian sell-off/failure is a public relations burden for federal education officials, otherwise the department wouldn’t have floated the “we didn’t know” narrative. The Department of Education is also facing a large potential bill for federal student loan refunds when a college or university is shuttered. With Education Management Corporation, for example, its 125,000 students would have to be considered. As of 2010, Apollo had 470,800 students.
4. Your school had a recent “win” with a regulatory agency
It could be argued that when Apollo was granted permission to begin enrolling veterans again in seven programs at its University of Phoenix's San Diego campus, the company had won a skirmish with the California State Approving Agency for Veteran Education. The agency had claimed that the university was enrolling more veterans than federal limits allowed, but the U.S. Department of Veterans Affairs decided differently and lifted the state agency’s enrollment ban on those programs. The California agency’s audit had also shown no other problems with the university, and found that Phoenix’s recruiting tactics were not misleading or overly aggressive. Perhaps the state audit is a good omen for Apollo.
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