PBS NEWSHOUR: Corinthian campuses getting nonprofit makeover

Career College Central Summary:

As a guarantor of student loans that specialized in collecting from students on the precipice of bankruptcy, the Educational Credit Management Corporation saw up close the “impact of students taking on debt, dropping out of school and being no better off than when they started college in terms of being able to find well-paying jobs,” according to David Hawn, the nonprofit guaranty agency’s chief executive officer.
So after initially “laughing and saying ‘no way’ ” when ECMC was first approached last year about buying parts of the failing Corinthian Colleges chain, Hawn perceived an opportunity.
“When I became president and CEO of ECMC in February a year ago, it became a passion of mine that we try to figure this out, to do something different in the way low-income students seeking post-secondary education and career-related training finance and complete their studies,” Hawn said.
The guarantor never envisioned becoming an operator of career colleges itself — let alone “perhaps the most distressed school assets on the planet,” as Hawn calls them — but that’s exactly what ECMC did in February, when the U.S. Education Department signed off on a sale of 53 of the failing for-profit Corinthian’s campuses (with 33,000 students) to Zenith Education Group, an ECMC subsidiary, for $24 million.
In a speech here this week to the National Council for Higher Education Resources, which represents lenders, guaranty agencies and other organizations that support student loan and grant programs, Hawn sought to explain ECMC’s reasons for buying the Corinthian campuses, its early plans for turning the failing campuses into going concerns, and “why I’m not as crazy as you might think” to create the nation’s largest nonprofit career college provider.
The ECMC purchase of Corinthian campuses generated scorn from some critics of for-profit colleges and advocates for student loan borrowers when it was originally announced in November, despite the fact that federal agencies — including those charged with protecting consumers — heralded the deal as the best possible outcome (even if the pickings were slim) for students and the government.
Critics raised numerous objections, from the practical — ECMC’s lack of experience running institutions — to the philosophical. While consumer advocates reserve much of their ire for for-profit colleges and companies, which ECMC is not, student loan providers aren’t much better in their eyes, especially one like ECMC that has profited nicely from fighting against student loan borrowers in bankruptcy proceedings.
Hawn may be unlikely to win over the more vehement of the deal’s critics, but his genial manner is disarming and some of the comments in his talk here this week suggest a radical shift in how the campuses have historically operated.
“The old way cannot be acceptable,” Hawn said.
“We’ve got to stop the madness of enrolling them, socking them with debt and being no better off toward getting a decent-paying job,” he said of career colleges.
Certain aspects of ECMC’s agreement to take over Corinthian’s Everest and WyoTech campuses captured much of the early attention, most notably the decision to forgive $480 million in loans Corinthian students took out from a controversial private lending program the for-profit college company created. Zenith, the new ECMC subsidiary, also agreed to cut tuition by 20 percent for all Everest students who enroll and to provide a 20 percent “graduation scholarship” (essentially a refund on previous payments) to help them repay their loans. Zenith has also dumped the private loan program for a program that will provide its students — 60 percent of whom qualify for full Pell Grants — with grants of up to $10,000.