With one sentence in a letter this summer, officials at the U.S. Department of Education brought one of the nation’s largest for-profit colleges to the brink of insolvency.
In that June 13 missive, the department told Corinthian Colleges it was imposing a 21-day waiting period on the company's access to federal student aid. The reason, department officials wrote, was Corinthian's failure to produce documents as part of an inquiry into allegations about falsified job placement and graduation rates.
Corinthian protested, warning that such a restriction on its cash flow could very quickly put the company out of business. And soon both Corinthian and department officials were scrambling to avert the sudden bankruptcy of a company with 72,000 students and 12,000 employees.
Both sides eventually reached an agreement that will close most of the company's campuses and sell off the remainder.
Even as that dismantling occurs, Corinthian -- or whatever is left of the company -- will continue to face a slew of challenges. Last Wednesday, for instance, the company saidit's facing a federal grand jury subpoena, restrictions on enrolling veterans and ongoing liquidity challenges.
But as those significant issues continue to play out, for-profit observers -- supporters and critics alike, and interested parties in Congress -- are scrutinizing the events earlier this summer that precipitated the company's downfall.
Documents provided by the Education Department suggest that officials were at least contemplating Corinthian's financial frailty as they cracked down on the company. And despite setting up a structure to more closely monitor and assess the finances of for-profit colleges in 2011, the department had let the system languish to some extent, according to an audit by department's own inspector general.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2014/08/19/education-department-reviews-its-monitoring-large-profits-wake-corinthian-collapse