STANDARD EXAMINER: For-profit college shutdowns cap $8 billion market-value plunge

Career College Central Summary:

  • The for-profit college industry’s implosion intensified, with two companies announcing mass campus closings days after a third filed for bankruptcy.
  • In a stunning fall from grace, the three companies, Career Education, Education Management and Corinthian Colleges, which once enrolled more than 300,000 students, have lost almost $8 billion in market value since their peaks over the last six years.
  • Career Education will shut or sell all of its career colleges to focus on its two universities, while Education Management will close 15 of its Art Institute campuses, the companies said late Wednesday. Corinthian Colleges declared bankruptcy this week in the biggest college collapse in American history amid allegations that it falsified grades and job placement to attract students.
  • A federal regulatory crackdown is reining in for-profit colleges, which have been accused by state and federal authorities of preying on low-income students and saddling them with debt. The companies have denied wrongdoing and say they are providing education to many lower-income students shut out of traditional colleges.
  • “The collapse of Corinthian Colleges was the canary in the coal mine for the for-profit college industry,” Sen. Richard Durbin, D-Illinois, said in a statement. He called the upheaval “a long-overdue reckoning for an industry that profits off of students while sticking them with a worthless degree and insurmountable debt.”
  • Hard hit are the so-called career schools, which charge tens of thousands of dollars for certificates and associates’ degrees in areas like criminal justice, dental assisting, art and cooking, where jobs and wages are limited.
  • Under federal rules slated for this summer, to qualify for U.S. financial aid, schools will have to show they’re preparing students for gainful employment and that their graduates spend less than 8 percent of their income on loan payments. A for- profit college trade group is challenging the new rules in court.

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