Department Of Education Says It Is Not Responsible For Closing For-Profit College

Career College Central summary:

  • In an briefing call yesterday, a senior Department of Education appeared to distance the agency from claims that it had intentionally caused the shutdown of a major for-profit college. After Corinthian Colleges announced in June that a financial penalty imposed by the Department of Education had placed it in danger of immediate collapse, observers and analysts were quick to credit the government with intentionally moving to shut down one of the sector’s most troubled colleges. The government “knew exactly what it was doing” when it cut off the cash-strapped company’s access to loan money, one analyst claimed; a Bloomberg story said the penalty showed the department had at last “found a way” to “rein in for-profit colleges.”
  • But on yesterday’s call, which reporters participated in on the condition they not name the officials speaking, a senior education official said the department did not intend to shut down Corinthian and did not know what would happen when it imposed a 21-day delay on Corinthian’s access to federal loan money. “We did not know the cash situation,” said the official, who would not be identified by name. “We had no foreknowledge that this would be the reaction.”
  • The Department of Education had to make clear it had not intentionally shut down the school in part because of its fraught history with attempts to regulate the for-profit industry, said Ben Miller, a senior policy analyst with the New America Foundation. When the department tried in 2011 to impose regulations that would shut down programs at poor-performing for-profit schools, it was accused of colluding with Wall Street short-sellers that benefited from sharp drops in stocks at for-profit colleges. An audit later cleared the department of wrongdoing, although some Republicans called for a further SEC probe, and a former top official with the department is still under federal investigation for illegally sharing information with an advocacy group.

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