Corinthian Colleges, one of the nation's largest for-profit college corporations, was poised to shut down after acknowledging its lifeblood (funds from student loans and grants) was being delayed by the U.S. Department of Education. But now the trouble-plagued, Santa Ana-based company says it has reached a deal with the feds to stay open--while it pursues a possible sale.
Corinthian had previously been blasted by a whistleblower, an investment manager, the Securities and Exchange Commission (SEC), the federal Consumer Financial Protection Bureau, California's Attorney General and the attorneys general of more than a dozen other states. But it was Thursday's disclosure to the SEC that had the company admitting the Education Department sanctions may jeopardize cash flow crucial to keeping it afloat.
When federal financial aid is approved for students, it becomes available to the school within three days. But the sanctions against Corinthian would have held up the federal aid for another 21 days, which the Department of Education blamed on the company failing "to address concerns about its practices, including falsifying job-placement data." Corinthian had already been struggling with cash flow over the last year, according to analysts.
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But Monday, Corinthian disclosed the Education Department will release $16 million immediately as the company and the feds "enter into an Operating Agreement that will allow Corinthian to proceed with its plan to pursue strategic alternatives for its operations, including the sale and teach-out of schools in a manner that will best protect the interests of students, faculty and staff, ensure the integrity of federal student aid funds and preserve the value of the schools."
That's no doubt thrilling news to those of the more than 81,000 students spread across more than 100 campuses in 25 states and Canada who use Corinthian enrollment to satisfy continued receipt of unemployment benefits. Of course, those who follow the news should have prepared for the worst; the Weekly for years and years has tracked the string of lawsuits and investigations against Corinthian.
Speaking of which, Attorney General Kamala D. Harris' lawsuit that accuses Corinthian of artificially boosting job placement rates to attract new students is still pending, as are all those under investigations by other federal agencies and other states.