Recently, the Department of Education announced our support for a deal that will strengthen the education prospects of nearly 40,000 college students on 56 Everest and WyoTech brand campuses, currently owned by the for-profit network Corinthian Colleges Inc. Under this plan, the Educational Credit Management Corporation (ECMC) Group’s new nonprofit education arm, Zenith Education Group, will buy the campuses from Corinthian and transform them from for-profit into nonprofit schools.
There has been considerable attention paid to this important and complex action, and it is essential that everyone have the facts. So I would like to explain why our Department decided it was necessary to take action on Corinthian, why we are supporting this sale, and what the results have been so far. I am proud of what our team has been able to accomplish in protecting students.
This is the latest step in a case that began when Corinthian failed to respond to the Department’s repeated requests for answers about questionable practices, including concerns that Corinthian was using false and misleading job placement data to market its schools and recruit students, and that it might be changing student grade and attendance data to hide performance problems. Following intense and thoughtful deliberations, the Department made the decision that we believed would most effectively prevent further damage and took action to heighten our oversight of Corinthian, ultimately leading to an agreement with the company that will end their ownership and operation of these schools.
From the start, we have kept students and their interests at the heart of every decision we have made about Corinthian, and charted a careful course through what threatened to be a major collapse of a large institution. We worked to avoid immediate closure of all Corinthian schools and prevent the sudden disruption of education for 72,000 students and the jobs of 12,000 employees. And, to defend student and taxpayer interests, we have put an independent monitor in place to oversee Corinthian’s actions as the company begins to sell and wind down its campuses. We selected the respected firm of Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates, under the leadership of former U.S. Attorney Patrick Fitzgerald, for this vital role.
ECMC has never run a college campus before, and I think everybody recognizes that improving Corinthian campuses will be a serious challenge. But there are many reasons why we feel this new agreement will particularly benefit students, and why we are confident they will receive a better education under ECMC and Zenith’s leadership:
Lower college costs. Students who attend the newly purchased campuses will receive a 20% cut in tuition.
Matching training numbers with real-world needs. For a college program to be truly worth the time, cost and effort, there must be jobs openings in students’ fields of choice when they graduate. Under this new plan, ECMC will work to balance the number of students enrolled in specific career programs with local and regional labor market trends – so students can understand which career fields have the greatest demand for workers, and gain the skills they will need for actual, available jobs.
Closing low-performing programs. At the same time, the Zenith Education Group will begin weeding out poor performers in Corinthian’s portfolio of programs, and steering students toward higher-quality programs. Students that are in poor performing programs will have several choices, including the possibility of transferring to other Zenith programs or receiving a partial refund of their costs.
Fresh leadership. No senior executive from the former Corinthian group will remain when the campuses are acquired by ECMC – making a clean break from previous management and from the types of practices that put the schools and students in jeopardy.
An unprecedented – and voluntary – commitment to oversight. As part of the acquisition and transition plan, the ECMC has agreed to hire a monitoring firm. The monitor will have access to Zenith’s data to ensure that the ways they recruit potential students, how they market their services, and the data they report on performance, especially on student outcomes, are fair, true and accurate. By volunteering for this level of review, Zenith is showing a strong commitment to transparency, and to sharing the types of information that help students and families make good decisions about the schools and programs that will best serve their needs. And the hiring of a monitor demonstrates just how serious ECMC is about remedying the past problems of Corinthian, and charting a new course.
This purchase plan also fends off disastrous consequences. First and foremost, students who are enrolled in Corinthian programs will have the opportunity to complete their education and receive the degrees and certificates that they have worked so hard to obtain. This sale, if ultimately approved by the Department, accreditors, and state authorizing agencies, will avoid disruption and displacement for tens of thousands of students – approximately 22 percent of whom are within 3 months of graduating.
Throughout our interactions with Corinthian, we have been guided by the belief that the best path forward for these students would be helping them to stay in school and complete their programs. Higher education can help students tremendously in fulfilling their career and life goals. And while all postsecondary students face unique challenges and hurdles, those who are enrolled in for-profit and career training programs are often among the most vulnerable. In many cases, they are juggling classes as well as a job (or two) and a family. Some have tried before to earn a degree, and found the courage to return to school even though earlier efforts didn’t work out. These are the students who most need the opportunities that higher education can bring.
The last thing we want to do is make them start over, especially when so many are close to finishing. They have already invested thousands of dollars and hours of their time earning credits that may not transfer to new programs at other schools. It would be unacceptable for any of them to be left holding public or private student loan debt, with no degree or certificate to show for it. We could not afford that risk with tens of thousands of students.
ECMC has made good commitments to safeguard the way forward for these students, and its nonprofit will operate independently from the larger corporation. We want to make sure ECMC does what they have said they will do – and we will watch them carefully. But we should all give them a chance to keep their promises and help make these students’ lives better.
This agreement lets students transition from a problematic for-profit company to a nonprofit that is committed to giving them a new start and better chances to succeed. We will also keep close track of sale or wind-down efforts on Corinthian’s other campuses, so students in programs that won’t be acquired as part of this deal can also finish their education without interruption. Ensuring that all students are served well remains our top priority, and we will continue to work on behalf of students and taxpayers.
And, as part of the Obama Administration’s efforts to promote quality and accountability in higher education, the Department has announced a federal interagency task force – which I will lead on behalf of Secretary Duncan – to help ensure proper oversight of for-profit institutions.
A quality education that leads to good outcomes – like a well-paying job and a strong future – is still the best investment anyone can make. Students seeking a better life shouldn’t pay a penalty for following their dreams. We cannot – and we will not – let their efforts go to waste.
Ted Mitchell is U.S. Under Secretary of Education.