The Obama Administration has targeted for-profit colleges as if they are enemy combatants. And now it has succeeded in putting out of business Santa Ana-based Corinthian Colleges for a dilatory response to document requests. Does the White House plan to liquidate the IRS too?
A month ago the Department of Education imposed a 21-day hold on Corinthian’s access to federal student aid because it “failed to address concerns about its practices, including falsifying job placement data used in marketing claims to prospective students.” The funding freeze triggered a liquidity crisis, which has culminated in Corinthian’s decision to wind down or sell its 97 U.S. campuses.
Like the for-profit college industry, Corinthian draws roughly 80% of its revenues from federal student aid. Yet this is a function of its demographics. For-profit schools educate a larger share of low-income, minorities, veterans and single mothers than do nonprofit and public colleges. Eighty percent of their students lack parental financial support.
The Obama Administration’s five-year lashing of “predatory” for-profits has deterred many new students from enrolling in these schools. Corinthian’s system-wide student body has shrunk to 72,000 from 112,000 in 2010, and the company had laid off 1,350 employees in the last year. Then there are investigations by the Consumer Financial Protection Bureau, Department of Justice, Securities and Exchange Commission and more than a dozen state Attorneys General over sundry alleged violations, which have added regulatory uncertainty and legal costs. Keep in mind that Corinthian has been found guilty of nothing.
Most of the investigations involve trumped-up charges of misleading job placement rates, which federal law requires for-profits—but not public and nonprofit colleges—to document and disclose. But here’s the rub: There’s no standard definition of “job placement.”