BLOOMBERG: The Collapse of a Huge For-Profit College Company Could Cost Taxpayers $200 Million

Career College Central Summary:

  • The abrupt closure of for-profit Corinthian Colleges Inc. may cost U.S. taxpayers more than $200 million in canceled student loans.
  • Corinthian reached an agreement on Sunday with the Education Department to shutter its 28 campuses serving about 16,000 students. Forgiving their debt, if all students request it, would cost the government about $214 million, according to Denise Horn, an Education Department spokeswoman.
  • When a college closes, enrolled students are eligible to have their federal loans discharged, under certain circumstances. Some Corinthian students who are able to finish their degrees by transferring into other programs may not qualify to have their loans canceled, said Daniel Hanson, an analyst with Height Securities in Washington.
  • “The principal focus for the Education Department right now is to make sure students left out in the cold find their way into other institutions,” he said in a telephone interview.
  • The Education Department will help Corinthian hold “transfer fairs,” and will contact Corinthian’s students to point them to information about schools where they can continue pursuing education, Horn said by e-mail. Education Department officials will immediately begin advising students at the closed schools of their options, Education Undersecretary Ted Mitchell said Monday in a statement.
  • Corinthian’s schools performed well and shouldn’t have been closed, said Rosemary Wilson, an outside spokeswoman for the company. Unable to sell the colleges, Corinthian is now trying to help students continue their educations, she said in an e-mail. Corinthian operates Everest, Heald and WyoTech schools.

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