A federal panel is recommending that one of the nation's leading accreditor of for-profit colleges lose its authority.
The recommendation that the Accrediting Council for Independent Colleges and Schools -- ACICS -- be stripped of its accrediting authority could prove disastrous for more than 200 colleges currently selling programs to more than 800,000 students nationwide.
Accreditation is one of the lynchpin's of any college's ability to function and authority to tap into federal student loan programs. For decades, hundreds of the nation's for-profit colleges have turned to ACICS to obtain their stamp of accreditation approval.
ACICS, in turn, has enjoyed the authority to grant accreditation through an approval process with the U.S. Department of Education. But a federal panel that helps determine which accrediting bodies can provide accreditation is now a recommending that ACICS be eliminated from the Department of Education's approved list.
in the Wall Street Journal, the National Advisory Committee on Institutional Quality and Integrity voted 10-3 last month to shut down ACICS's accrediting authority. The U.S. Department of Education now has until September 2016 to determine the accreditor's fate.
If ACICS loses its authority to accredit for-profit colleges, each college and trade school currently accredited by ACICS will have 18 months to find a new accreditor.
ACICS accredited Corinthian Colleges, a massive for-profit education company that collapsed in 2015 amidst state and federal scrutiny of the school's marketing and placement practices.
The U.S. Department of Education is sorting through nearly 20,000 loan-forgiveness requests from students asserting that their for-profit colleges misled them when they took on heavy debt burdens to pay for expensive programs.
The Wall Street Journal recently reported that the Department of Education is processing 19,657 so-called "borrower's defense requests" in which former students have an opportunity to demonstrate that they were misled at the time of enrollment with promises relating to programs and job placement.
To date, the government has allowed around 3,400 borrowers to cancel $27 million in student loan debt, with the vast majority relating to former students of Corinthian Colleges, Inc., the for-profit giant that ran Everest, WyoTech and Heald College before it collapsed as a result of intense federal scrutiny.
Inside Higher Ed reports
that the remnants of Corinthian Colleges purchased last year by Zenith Education Group have shrunken further due to additional consolidation.
According to the news organization, Zenith is consolidating eight of the campuses of the Everest and WyoTech campuses that it purchased last year from Corinthian Colleges and is gradually closing two campuses in Florida.
More than Z00 Zenith employees are losing their jobs and more than 100 positions at Everest Online and student financial support are being eliminated, according to Inside Higher Ed.
After this round of consolidation, Zenith will have 24 Everest campuses and three WyoTech campuses, the news organization reported.
Earlier in March, the Associated Press reported
that many problems at Everest and WyoTech were persisting for students after Zenith's purchase in 2015 of parts of the now-defunct Corinthian Colleges chain. Zenith disputes
the A.P. story.
The U.S. Department of Education announced
last week that thousands of additional former students of Corinthian Colleges are eligible to have federal student debt forgiven due to evidence of fraud by the former for-profit school chain.
The government said that "students who were defrauded at 91 former Corinthian Colleges . . . nationwide have a clear path to loan forgiveness under evidence uncovered by the Department while working with multiple state attorneys general."
As a result of the government initiative, students who attended Everest and WyoTech schools in 20 states, including Michigan, can apply for debt relief by completing a form
. The other states covered by the initiative are Massachusetts, California, Illinois, Texas, Georgia, Colorado, Pennsylvania, Florida, Washington, Virginia, Ohio, West Virginia, Minnesota, Nevada, Missouri, Indiana, Wisconsin, Oregon, New York, Utah, Maryland, New Jersey, and Wyoming.
To date, as part of prior initiatives by the government aimed at providing debt relief to other student victims of Corinthian's fraudulent and predatory operations, more than 8,800 students have been granted debt relief totaling more than $130 million, the government said.
Corinthian Colleges suddenly closed its doors on dozens of its campuses across the nation in April 2015 in the wake of multiple government investigations regarding misrepresentations made to students during enrollment and regarding placement.
A California state court judge has hit now-defunct Corinthian Colleges with a $1.1 billion judgment for deceptive trade practices that played a significant role in the unraveling of the for-profit education giant nearly a year ago.
The final default judgment entered by San Francisco Superior Court Judge Curtis E.A. Karnow found that Corinthian had "knowingly misled students with phony job numbers and advertisements for programs that didn't exist, illegally used official military seals in its promotions and engaged in unlawful debt collection practices, among other violations," according to a report
in the San Jose Mercury News.
The suit against Corinthian was brought by California Attorney General Kamala Harris, one of a number of state and federal regulatory actions brought on behalf of current and former students of for-profit giant Corinthian, which aggressively and deceptively marketed education programs under brands that included Heald, Wyotech and Everest.
In April 2015, under intense regulatory pressure, Corinthian suddenly closed, filing bankruptcy a month later.
In a news release, the California attorney general hailed the $1.1 billion judgment, saying, "This judgment sends a clear message: there is a cost to this kind of predatory conduct."
With the notorious Corinthian College's demise now complete, thousands of students find themselves with massive debt and unresolved questions regarding programs that they now cannot complete.
On April 26, Corinthian suddenly announced
that it would be immediately shuttering its remaining 28 campuses, bringing to a close a year-long fall from a perch as one of the country's largest for-profit career college chains to the most glaring example of an industry rife with problems for failing to deliver on promises of job placement and bright futures with expensive programs.
Corinthian ran chains of for-profit schools, including Everest Institute, Wyotech and Heald College. Last June, the Education Department cut off the schools' main source of income -- federal student aid. The move forced Corinthian to sell or close all but a small group of its campuses. More recently, the government imposed a $30 million fine on the company for allegedly misrepresenting placement rights. And the federal Consumer Financial Protection Bureau is suing the school, seeking $500 million for allegedly steering students into high-interest private loans.
“Corinthian enticed students to enroll in its schools and to take on enormous debt. Their profit model was to cheat their students,” said Sen. Elizabeth Warren (D-Mass.), at a forum following the Corinthian closing, according to a Washington Post report
. “Corinthian was shut down, but what about the tens of thousands of students who were taken in by the lies? They are still paying those loans back.”
Former students may have a basis for seeking discharges on the massive loans that they incurred for programs they now cannot complete, but the process is slow and uncertain. If you are a student with concerns about next steps that you wish to share with attorneys at College Watchdogs, you may do so here
or by calling 877-540-8333.
The Obama Administration's ongoing efforts to regulate the for-profit college industry have yielded a $30 million fine against Corinthian Colleges and threaten to result in similar penalties against other schools.
On April 14, the U.S. Department of Education informed Corinthian
that it intended to fine the for-profit education company's Heald College subsidiary $29.66 million for misrepresenting its placement rates to current and prospective students and to its accreditors, and for failing to complete with federal regulations requiring the complete and accurate disclosure of its placement rates. Heald is a 13-campus subsidiary with schools primarily in California and other western states.
The government claimed that it had identified more than 900 separate instances of The government's sanctions also prohibit Heald from enrolling new students.
"This should be a wake-up call for consumers across the country about the abuses that can exist within the for-profit college sector," Education Secretary Arne Duncan
said in a statement. "We will continue to hold the career college industry accountable and demand reform for the good of students and taxpayers."
As noted by Inside Higher Ed
, the regulation used to punish Corinthian and Heald is a a job-placement requirement adopted in 2010 that "has emerged as a possible tool to crack down on for-profits." The regulation requires colleges to disclose job-placement rates of graduates in programs that fall under "gainful employment."
With respect to Heald's violations of the accurate job-placement reporting requirements, the Education Department's findings were devastating.The Huffington Post reported
that the government had found that Heald’s "inaccurate job placement rates constituted a 'substantial misrepresentation,' a finding that allows the department to prohibit the school from accessing federal student aid such as Pell grants and loans that students would use to pay for tuition."
"For example, Heald allegedly misled prospective students by advertising false job placement rates that omitted the fact that many of its graduates simply weren’t counted. It also told prospective students that it confirmed graduates’ employment with the graduate or her employer. In reality, the Education Department said, the school in many cases simply relied on its own career services staff for confirmation."
"Heald also paid staffing agencies to hire its graduates, the Education Department said, and counted them as officially employed in their field. In one case, the department found a Heald graduate who only was employed for two days moving computers and organizing cables."
California consumer protection officials have ordered the once-venerable Corinthian Colleges to stop enrolling new students at its remaining 13 Wyotech and Everest College campuses in the state due to growing concerns about the schools' viability.
According to a report in the Orange County Register
, officials with the state's Bureau of Private Postsecondary Education cited concerns over the schools' financial resources, mounting legal pressures and inadequate regulatory disclosures
in issuing the order to stop new enrollments to Corinthian, which does not require the for-profit company to cease operations.
California bureau chief Joanne Wenzel said in a statement that the order was necessary to “protect individuals who may have been thinking about enrolling at these schools.”
The Register report added: "Corinthian has been seeking to sell its California campuses since June under an agreement with the U.S. Department of Education and has previously argued that continuing to enroll students was necessary to maintain their financial viability and prevent school closures.The agreement with the U.S. Department of Education followed years of increasing scrutiny by state and federal regulators over the accuracy of Corinthian’s job placement statistics and loan practices, and marked the beginning of the company’s slow unraveling. Corinthian officials maintain that regulators have unfairly targeted them for isolated incidents of employee misconduct and their business model performs a valuable role in educating students who are under-served by more traditional institutions."
The attorneys general from nine key states are calling upon the federal government to forgive federal loans issued to thousands of students at Corinthian Colleges, which imploded last year after years of criticism of sharp practices in enrolling adults in expensive programs with few job prospects after graduation.In a letter to Secretary of Education Arne Duncan
, these top Democratic prosecutors last week urged the U.S. Department of Education "to immediately relieve borrowers of the obligation to repay federal student loans that were incurred as a result of violations of state law by Corinthian Colleges, Inc."
The attorneys general were from Massachusetts, California, Connecticut, Illinois, Kentucky, New Mexico, New York, Oregon and Washington.
The call for debt relief comes at a time when a group of 100 former students of Corinthian are refusing to pay
their loans used to pay for programs that they say were worthless.
In 2014, Corinthian announced that it would be closing and selling off its schools such as Everest and Wyotech after U.S. Department of Education officials froze access to federal financial aid for three weeks at a time when the company was facing multiple challenges, including a lawsuit by the Consumer Financial Protection Bureau.
The widely publicized student loan debt revolt started by a group of former students of Corinthian Colleges -- known as the Corinthian 15 -- has enlisted an additional 85 protestors. Enter the newly entitled "Corinthian 100."
As recently reported by The Washington Post, the "'debt strike' has picked up 85 more disgruntled borrowers" from Corinthian schools who are "willing to jeopardize their financial future to pressure the government into forgiving their student loans."
The Post says, "Corinthian, which runs Everest Institute, Wyotech and Heald College, has become the poster child for the worst practices in the for-profit education sector, including high loan defaults and dubious programs. Clouded by allegations of deceptive marketing and lying to the government about its graduation rates, Corinthian lost its access to federal funds last year, forcing the company to sell or close its schools."
"In the aftermath, current and former students of the for-profit schools have called on the Education Department to wipe away debt they say Corinthian pressured them into taking. After months of pleading with the department to forgive the federal loans, the students teamed with an offshoot of the Occupy Wall Street movement known as the Debt Collective. Together, they came up with the idea for the strike."
"It’s a dicey move because students who default can lose their paychecks, tax refunds or even a portion of their Social Security. Not paying back debt can also ruin someone’s credit, making it difficult to buy a house or car, or to get a job."