Department of Education gives WyoTech a reprieve
The WyoTech campus in Burrell Township will either be sold or closed under an agreement between its corporate parent, Corinthian Colleges Inc., and the federal Department of Education.
Corinthian, among the largest operators of for-profit colleges and vocational schools in North America, said on Monday the agreement temporarily stabilizes its finances, which have been severely impaired owing to a 21-day hold the department has placed on the financial aid dollars due to its schools.
Typically, that money is accessible within one to three days of asking for it. The hold is problematic for Corinthian because it already is financially stressed, and the hold was imposed at a time of year when cash flows are at their lowest.
The department said it took that step because the company hadn’t addressed concerns about its business practices, which include using false job placement data in its marketing and altering grades.
Corinthian and for-profit schools have been under close scrutiny on charges that they entice people to enroll through deceptive marketing, and then charge them high tuition and interest rates on loans for degrees that have little, if any, value.
Corinthian, in fact, is being sued by California and Massachusetts over its practices. And 16 other states, including Pennsylvania, are investigating the company.
The deal the company struck with the department will give it access to $16 million, which will help shore up its books long enough for it to sell or to “teach out” its schools. Schools that are to be taught out would be closed through attrition — they’d stop accepting new students, but would allow current students to complete their studies under a plan that is to be developed.
The company has not made a decision on which schools are to be closed or taught out. That is to come by July 1. The company said its intent is to sell the schools it selects for sale within six months.
Corinthian also has agreed to name an independent business monitor to look over its shoulder.
“Students and their interests have been at the heart of every decision the department has made regarding Corinthian,” said U.S. Undersecretary of Education Ted Mitchell in a statement.
“We will continue to closely monitor the teach-out or sale of Corinthian’s campuses to ensure that students are able to finish their education without interruption and that employees experience minimal disruption to their lives. The department is committed to ensuring all students receive a quality education that leads to a well-paying job and a strong future,” he said.
The company said that although having access to the $16 million helps, it’s not enough to fully resolve its cash problem. So it said it will continue to negotiate with the department on lifting the 21-day hold.
It may also look to borrow money, make additional cost reductions, accelerate asset sales or use some combination of those options.
The company disclosed Friday that it had already asked its lenders for extra cash, but they declined. The company already has laid off scores of people and closed or sold several others schools.
“There can be no assurance that that ED will modify the 21-day delay … or that Corinthian will be able to obtain any such additional needed liquidity on a timely basis, on terms acceptable to it, or at all,” the company wrote in a disclosure.
Corinthian operates 107 campuses: WyoTech, Heald College and the Everest schools.