WALL STREET JOURNAL: Corinthian’s Last Rites

Career College Central Summary:

It’s good that Education Department regulators don’t oversee drone strikes. Behold how DoE’s blunderbuss assault on the for-profit Corinthian Colleges has harmed thousands of students and employees.
On Monday the Santa Ana-based for-profit shut down its remaining 28 schools, which no buyer would purchase amid the government’s regulatory ambush. The closure displaces 16,000 or so students—many mere months away from graduation—and 2,500 workers.
Last summer the Education Department began to drive Corinthian out of business by choking off federal student aid for supposedly stonewalling exhaustive document requests. The Department claimed to be investigating whether Corinthian misrepresented job placement rates as California Attorney General Kamala Harris alleged in a lawsuit.
Note that the federal government doesn’t specify how for-profits calculate their job placement rates. States and accrediting agencies have disparate and often vague rules, which notably don’t apply to nonprofit and public colleges.
At government gunpoint, Corinthian in July agreed to sell 85 campuses and wind down 12 others over six months. In November the nonprofit Education Credit Management Corporation (ECMC) agreed to buy more than 50 Corinthian campuses for $24 million plus $17.25 million in protection money to the feds for a release from liability. But ECMC passed up Corinthian’s 23 schools in California because Ms. Harris wouldn’t quit.
Earlier this month, DoE fined Corinthian $30 million for misrepresenting job placement rates of roughly 900 students at 12 schools since 2007. Most alleged violations were paperwork errors and misrepresented Corinthian’s systemic compliance. In 2010 Corinthian enrolled 110,000 at 100 some schools, which were in good standing with accreditors until last summer.
The penalty scared away prospective buyers and pushed Corinthian over the cliff. Department Under Secretary Ted Mitchell claims that the “closure decision was made by the company,” though the government deliberately pushed Corinthian to the precipice.
To mitigate the political damage, DoE is deputizing financial aid counselors to help Corinthian’s student refugees. Yet most community colleges don’t offer Corinthian’s vocational programs and flexible schedules, and many for-profits don’t accept Corinthian’s credits. Ms. Harris and the feds have also made clear they intend to continue their persecution of for-profits, so students could enroll in another political target.

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THE WALL STREET JOURNAL