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.