Monday, June 23, 2014
SANTA ANA, Calif. (AP) — Corinthian Colleges Inc. and the U.S. Department of Education have reached an agreement that will allow the for-profit education company to receive an immediate $16 million in federal student aid funds and keep operating.
The announcement comes just days after Corinthian cautioned that it may have to shut down because of its clash with U.S. regulators over student data and at a time when Corinthian is looking to sell off some of its schools.
Corinthian — which owns the Everest College, Heald College and WyoTech schools — said last week that the Education Department had limited its access to federal funds after it failed to provide documents and other information. The Education Department said it heightened its oversight of the Santa Ana, California-based company after requesting data "multiple times" over the past five months.
The Department of Education said Monday that Corinthian must provide enrollment documentation to back up the funding request. An independent monitor approved by the agency will review matters related to ongoing operations at Corinthian and will have full access to the company's financial and operating records.
Corinthian said that the memorandum of understanding reached with the Education Department will allow its schools to maintain daily operations without interruption. It currently serves about 72,000 students.
Corinthian said an operating agreement with the Education Department will allow it to continue to pursue strategic options for its operations, including the sale and "teach-out" of schools. In a "teach-out," no new students are enrolled but current students are able to complete their programs or transfer to another school.
Corinthian said it will look for new owners for most of its campuses and hopes to have sales agreements in place within about six months.
The company plans to continue with the "teach-out" of schools that are underperforming or whose participation in Title IV student aid programs was ended by the Education Department.
U.S. Under Secretary of Education Ted Mitchell said in a statement that the agency will continue to monitor the sale or "teach-out" of the schools to make sure students can finish their education without interruption and that employees have minimal disruptions.
Corinthian said the memorandum of understanding with the Education Department is a "positive step," but it still needs additional liquidity to fund its operations. The company also disclosed that the Education Department is considering denying recertification or removing certification of institutional Title IV eligibility for certain Corinthian schools. Corinthian said many of its schools have provisional Title IV program participation agreements with the government, while other schools' agreements have expired or are about to expire.
Corinthian said the Education Department could decline to renew expiring participation agreements or end existing agreements if it identifies "significant institutional failures." Corinthian said depending on the school, that could have a material adverse effect on the company.
Details of the memorandum of understanding are expected to be finalized in an operating agreement by July 1.
Corinthian's stock rose 8 cents to 41 cents in afternoon trading. Its shares have fallen 76 percent in the last three months.