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Orange County–based Corinthian Colleges, the for-profit college operation, announced yesterday (July 4) that it will sell almost 100 schools in the United States and Canada and shut down 12 others through an agreement with the federal Department of Education. This almost wipes out the company, said the New York Times. The California attorney general sued Corinthian last year for lying to students and investors about job-placement rates for graduates.

The education department has demanded job-placement information from the company and gotten nowhere. Last month, the department threatened to cut off federal funds, which would mark the end of the company. Last year, federal student loans accounted for $1.4 billion of its $1.6 billion in revenues. The company has reported huge losses and stock of the onetime Wall Street darling has sunk to 28 cents at Friday's close.

The company wants to sell all those schools, but there is a big question: to whom? Last year it had to pay another company to take four campuses off its hands, says the Times.

The stock will probably go down to close to zero Monday unless it is closed for trading. Corinthian's woes may well affect stock of San Diego's Bridgepoint Education, which has similar problems with regulators. Other for-profits will probably be hit, too, because the group tends to run in tandem.

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Comments

Visduh July 5, 2014 @ 7:34 a.m.

This could be the death knell for all the abusive for-profits; or it could be a fluke, not to be repeated. Indeed, who would or could buy those "schools?" Most or all of them are probably nothing much more than some second-tier office space rented in cities around the nation. But maybe the attempt is to keep them open so that students already recruited and pursing degrees will have a local operation to assist them, and can continue. Or some of them might have had real, live, face-to-face classes, and not just on-line, canned lectures.

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Don Bauder July 6, 2014 @ 7:10 a.m.

Visduh: I agree: it will be difficult for Corinthian to sell all those campuses -- or any of them. The other for-profits are under the gun, too. As the story relates, Corinthian had to pay to get another company to take four schools last year.

It will be quite interesting to watch Corinthian stock Monday. If the market thinks it will sell the schools and wind up with cash or accounts receivable worth something, the stock could hold up. I think that is unlikely. It's possible the stock won't trade right away, but eventually it will have to trade.

What happens to Bridgepoint stock? Finally, the Department of Education is cracking down on these for-profit scams. My guess is that stock of Bridgepoint, Apollo and the others will get hit Monday, but you never know. Best, Don Bauder

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aardvark July 5, 2014 @ 9:44 a.m.

I guess there wasn't enough room for the Manchester U-T to report this in their MASSIVE Financial section, as it was buried on the 2nd-to-last page of the "A" section this morning.

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Don Bauder July 6, 2014 @ 7:16 a.m.

aardvark: The U-T has been licking Bridgepoint's boots for several years. After all, if the company finances the Holiday Bowl, it has to be good, right? It just gave $100,000 to the county. So according to the downtown oligarchs, Bridgepoint must be a model educational institution.

Pathetic, actually. Best, Don Bauder

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Don Bauder July 7, 2014 @ 8:17 a.m.

STOCKS DOWN IN EARLY TRADING. Early Monday morning, stock of Corinthian Colleges is down 13.7% to 24.5 cents. San Diego's Bridgepoint Education is down 1.92% to $13.30 and stock of the largest for-profit operation, Apollo Education Group, is off 3.03% to $31.04. The overall market is down significantly. I will report on this again. Best, Don Bauder

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Don Bauder July 7, 2014 @ 1:43 p.m.

FOR-PROFIT COLLEGE STOCKS CLOSE DOWN EVEN MORE. At the close of trading today (July 7), Corinthian Colleges was down 20.77% to 22.5 cents; San Diego's Bridgepoint Education dropped 2.29% to $13.25, and Apollo Education Group dropped 4.06% to $30.72. Best, Don Bauder

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