The demise of for-profit education company Corinthian College has shut out 16,000 students, mostly in California, from their classrooms. And it could cost U.S. taxpayers as much as $214 million, according to an estimate by the U.S. Department of Education.
Under the plan Corinthian announced on Sunday, the company has closed its 13 remaining campuses, including Everest and WyoTech campuses in California, Everest College in Arizona, and Heald College, which had 10 locations in California, one in Hawaii and one in Oregon. The Los Angeles Times noted that getting credits to transfer from Everest and WyoTech to either a community college or four-year school would be difficult because those schools have nontraditional accreditation that career schools use.
"Transferring credits from one private postsecondary school to another is almost always problematic and it almost always doesn't happen," California Department of Community Affairs spokesman Russ Heimerich told the paper.
Heald is different. For-profit college critic Ben Miller told CBS MoneyWatch it has a "better brand" than the other schools. Its accreditation comes through WASC Senior College and University Commission. The school says on its website that its courses are accepted for credit by the California State University System. A spokesperson for the system didn't respond to a request for comment.
Corinthian and the U.S. Department of Education plan to hold "Transfer Fairs" to educate students about the programs that are similar to the ones they were studying for at Corinthian. Dates for these fairs haven't been set. Some students may not be able to graduate.
"There is going to be a bit of a bumpy transition," Miller said. "It's better to get Corinthian out of the marketplace so that it could stop doing active harm to students. "
Students are able to discharge their loan debt if their school closes and they aren't able to transfer their credits elsewhere. Those who want to continue their studies may have to repeat some courses so they can stay on track to graduate, according to experts who caution against making broad generalizations because every student's situation is unique.
Corinthian, which is based in Santa Anna, California, agreed in a July 2014 settlement with the U.S. Department of Education to sell 85 locations and wind down operations at 12 others. Several months later, it announced a sale of 56 Everest and WyoTech campuses to Zenith Education Group for $24 million.
The Education Department, though, wasn't done with Corinthian. It levied a $30 million fine against it this week for padding its job-placement statistics by paying employment agencies to hire graduates as temporary workers.
According to Corinthian, which has denied wrongdoing, the timing couldn't have been worse.
"In parallel, the company had been in advanced negotiations with several parties to both sell the 150-year-old Heald College and to arrange for teach-out partners to allow its Everest College and WyoTech students in California to continue their education," Corinthian said in a statement. It added that these efforts "were unsuccessful largely as a result of federal and state regulators seeking to impose financial penalties and conditions on buyers and teach-out partners."
A more sensible move would have been for the Education Department to allow Corinthian students to complete their studies at their existing campuses, according to Tony Bieda, vice president of external affairs of the Accrediting Council for Independent Schools and Colleges, the largest accreditor of for-profit colleges
"That's the best option rather than find transfer locations for these students," he said. "For now there's going to be a lot of anxiety."
When asked if his organization had told the Obama administration about its concerns, Beida replied: "I am not sure they care what we think anyway."
In Miller's view, Corinthian has no one but itself to blame for its troubles. The company failed to see "the writing on the wall," he said, and continued to recruit students until the end.