The Obama administration is at risk of repeating the mistakes that led to the expensive collapse of for-profit chain Corinthian Colleges Inc.
In that case, the Department of Education failed to address years of allegations that the company’s schools swindled its students and warning signs that Corinthian was facing financial difficulty. When the department finally took action by delaying the delivery of federal student aid to the schools, officials were "surprised" by the cash crunch the delay caused. That set off a series of events that culminated in Corinthian filing for bankruptcy protection less than a year later. The increasing cost to taxpayers of Corinthian's collapse was at least $90 million as of March.
Now the department's recent demand that cash-strapped ITT Educational Services Inc., owner of the eponymous career schools, stump up additional money to cover the cost of a potential collapse could unwittingly exacerbate ITT’s financial woes.
Read more at Bloomberg: http://www.bloomberg.com/news/articles/2016-06-09/the-obama-administration-could-cause-the-next-big-for-profit-college-collapse