Mainstreet - For-Profit College Chain Falsified Grades, Attendance Records

News Article

By John Sandman

The Department of Education (ED) last week reported that Corinthian Colleges, part of a for-profit college chain, failed to report mandated data concerning its student enrollment and other practices. ED stated that Corinthian also falsified job placement data in its marketing campaign while it alleged that grades and attendance records were altered--all threats to the school's continued operation.

These latest revelations comes on the heels of active investigations by some 20 state attorneys general, the Consumer Financial Protection Bureau, the Department of Justice and the Securities and Exchange Commission.

Corinthian Colleges and Department of Education Say They Are Working Toward an Orderly Shutdown
For-Profit College Chain Falsified Grades, Attendance Records
Ed Trust: Cut Federal Aid to Schools With Low Pell Enrollment
Go to College Without Borrowing a Dime
Student Loan Servicers to Be Scrutinized By Task Force
Both Illinois Attorney General Lisa Madigan and Senator Dick Durbin (D-Ill.) called on Corinthian to stop enrolling students in the state, where it operates on six separate campuses under the name "Everest College," where about 3,300 are enrolled.

"Corinthian stock dropped sharply on the news that, because of its failure to disclose requested data, the U.S. Department of Education is requiring Corinthian schools to wait 21 days -- instead of only a day or two -- after submitting enrollment information before they can access any federal Title IV funds," said Durbin. "It's time to make the protection of Everest College students our highest priority. Corinthian should immediately stop enrolling students to prevent more students from being loaded with debt if the company fails because of fraudulent disclosures to the federal government."

Illinois Attorney General Madigan has also been on the case.

"My office has been investigating for-profit colleges for several years having received hundreds of complaints about questionable marketing and lending practices, including dubious claims of job placement rates and accreditation status," she said last week. "I am encouraged by the Department of Education's efforts to hold Corinthian Colleges accountable at the federal level as we continue to work in Illinois to protect students' interests."

Durbin has been after ED to do something about Corinthian since at least December, when he sent a letter to ED Secretary Arne Duncan citing Corinthian's history of manipulation and deceit. Durbin also called on the Accrediting Commission of Career Schools and Colleges -- Corinthian Colleges, Inc.'s accreditor -- to take action that could lead to a loss in accreditation.

"For years I have been calling public attention to the growing scandal in the for-profit college industry," Durbin said. He asserted that "their diplomas are often worthless and they account for an incredible 46% of all student loan defaults, despite enrolling only 10% of the nation's students."

Corinthian Colleges and Department of Education Say They Are Working Toward an Orderly Shutdown
For-Profit College Chain Falsified Grades, Attendance Records
Ed Trust: Cut Federal Aid to Schools With Low Pell Enrollment
Go to College Without Borrowing a Dime
Student Loan Servicers to Be Scrutinized By Task Force
In terms of the loans students are on the hook for, Mark Kantrowitz, author of Filing the FAFSA and publisher or Edvisors.com, saw a silver lining of sorts, at least concerning the end game.

"If Corinthian fails because the method under which they obtain federal student aid funds causes cash flow problems, the student loans will be dischargeable under the closed school discharge," he said. Under this scenario, Corinthian students will not be on the hook if the school shut down."

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