Dive Brief:
- Corinthian Colleges Inc., one of the largest for-profit education companies with 72,000 students, has between 24 hours and a week to line up rescue financing to avert closure, the Wall Street Journal reports.
- The company warned in a Thursday filing with the U.S. Securities and Exchange Commission that it may not be able to continue operating due to a move by federal regulators last week to restrict its access to federal funding, which accounts for 80% of its revenue.
- The U.S. Department of Education says Corinthian has failed to address its concerns about the company’s marketing practices and alleged falsification of job-placement data. According to the department, Corinthian hasn’t responded to five letters sent since January.
Dive Insight:
This obviously represents an unprecedented get-tough approach by the Obama Administration with for-profit educators. It’s also a lesson to other companies in the sector: If you get a letter from the Department of Education, you’d better respond. Corinthian says that that since January it has “expended substantial resources” in providing documents to the department, and since June it has added 100 employees to try to keep up with the requests, the San Francisco Chronicle reports.
Inside Higher Ed reports that if Corinthian does shut down, the Department of Education has a “teach out” plan that helps students at a shuttering college to wrap up their studies or transfer. But some doubt whether the plan would work with a college failure on the scale of 72,000 students.