Education Dept. Forces Corinthian Shutdown

WASHINGTON (CN) - The Obama Administration's recent rules for protecting students from for-profit career college fraud have forced the complete closure of Corinthian Colleges Inc., including its Heald campuses. After a series of enforcement actions, the final closure leaves an estimated 15,000 students in five states in limbo. The company announced the closure of its remaining 28 campuses effective Monday in a press release Sunday.

Following the Administration's directive, the Department of Education began the process in 2009 of developing the new rules published in October 2014 to hold career training programs accountable for providing students with an affordable path to gainful employment.

Concerns regarding Corinthian College's job placement rates surfaced in January 2014, and the Education Department took steps to increase oversight. When the college system reportedly refused to respond to the department's questions regarding questionable practices related to job placement data last summer, the agency intensified its oversight, which led to an agreement resulting in the closures. In November of last year, the college system sold 56 Everest and WyoTech campuses, according to Under Secretary of Education Ted Mitchell's blog statement today.

The department confirmed in a recent press release that it had found nearly a thousand instances of misstated placement rates and fined the company $30 million. The investigation found that Heald had paid temporary agencies to hire graduates for temporary work and then included those as 'placed' graduates. The data also included placements that were not in the field the student studied, graduates whose employment began before they graduated or even before they attended Heald, and excluded students the college had classified as 'unavailable for employment' for one reason or another, including up to 60 percent of the criminal justice program students, and 43 percent of the medical assisting students.

The students at the 56 previously sold campuses were able to continue their education and some employees kept their jobs, but negotiations to sell the 150-year-old Heald campuses and remaining Everest and WyoTech campuses were unsuccessful.

"We believe that we have attempted to do everything within our power to provide a quality education and an opportunity for a better future for our students," Corinthian CEO Jack Massimino said in the company's announcement. "Unfortunately the current regulatory environment would not allow us to complete a transaction with several interested parties that would have allowed for a seamless transition for our students."

The students of the closed campuses may be eligible for loan discharges and will receive information from the Education Department regarding their options. "As Corinthian closes its doors for good, the department will continue to keep students at the heart of every decision we make and will communicate with Corinthian students about all their options going forward. What these students have experienced is unacceptable and we look forward to working with Congress in an effort to improve accountability and transparency in the career college industry," Mitchell said.

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