Corinthian Abruptly Shuts All Campuses, in Mid-Semester

[Puppycow]

Way to go! Many students were just weeks away from graduation.

Corinthian Abruptly Shuts All Campuses, Ending College for 16,000

Corinthian Colleges Inc. shut down its remaining 28 for-profit career schools, ending classes for about 16,000 students, in the biggest collapse in U.S. higher education.

All campuses will be closed effective Monday, Corinthian said in a statement Sunday. The company, which owns the Everest, Heald and WyoTech schools, said it will work with other colleges to try to place the students.

Corinthian collapsed last summer after the U.S. Education Department curtailed its access to federal student aid. The Santa Ana, California-based company agreed to sell half of its 107 campuses to Education Credit Management Corp. in November amid allegations that it falsified grades, attendance and job-placement rates.

Sunday’s abrupt closure of Corinthian Colleges – including Heald in Rancho Cordova and Roseville – shocks students

Some were only weeks away from graduation. Others were just beginning their quest for a higher degree.

But on Sunday, scores of Heald College students in Roseville, Modesto and statewide were left feeling bitter and bewildered at finding their campuses would immediately close. That news came following an announcement by parent company Corinthian Colleges that it would shutter all 28 of its remaining campuses, rounding out months of trouble for the for-profit college giant.

“I went to school all week, just like normal, and I thought (Monday) would be just another regular day,” said Maria Mejia, 45, who was 10 weeks away from completing her medical office administration degree at Heald College’s campus in Modesto. “I still have homework due for tomorrow. I keep thinking what am I going to do? ... If I show up to class tomorrow, are the doors going to be locked?”

And is it just Corinthian or should all for-profit colleges be viewed with suspicion?

Recently John Oliver did a good segment on them that made me think that students who go to these places are being overcharged and getting an inferior value for their money. After watching it, it seemed to me like the situation with these for-profit colleges is even worse than I had imagined it to be. Many of the students end up with crushing debt burdens, but not very good employment prospects. Well worth watching IMO:

 

[Puppycow]

Huh, I wondered if some contrarian would rise to defend the honor of for-profit colleges. No takers?

I recommend watching the John Oliver bit because he makes a topic that sounds boring quite interesting, but this article also lays out some basic facts:

3 Must-Know Facts About For-Profit Colleges, Student Debt

We're paying greater attention to for-profit colleges because investigations are turning up worrying borrowing levels, debt levels, default levels, and poor outcomes in general, including some cases of fraud, says Pauline Abernathy, vice president of the Institute for College Access & Success.
. . .
1. For-profits are expensive. ​Tuition and fees at for-profit colleges averaged $15,130 in the 2013-2014 academic year, according to the College Board's Trends in College Pricing.

That's compared with $3,264 at two-year public colleges for in-state students and $8,893 at four-year public colleges for in-staters.
. . .
Higher price tags mean high levels of borrowing. Nearly 90 percent of 2012 for-profit graduates had student loans​, with the average debt among for-profit college graduates who borrowed reaching nearly $40,000, according to the Institute for College Access & Success. ​

Those high costs can skyrocket for students who delay graduation, which just 31.5 percent of for-profit students manage to achieve within six years, according to federal data. That's compared with about 57 percent at public institutions​ and about 66 percent ​at nonprofit private colleges.

The $40,000 average debt burden compares with $25,550 for public 4-year colleges and $32,300 for private non-profits.

2. For-profit graduates struggle to find employment. Studies suggest that applicants who list for-profit college credentials on their resumes don't get ​called back by potential employers as frequently as graduates who hold other kinds of degrees​.

Applicants with business bachelor’s degrees from large online for-profit institutions are about 22 percent less likely to hear back from employers than applicants with similar degrees from nonselective public schools, says the study from the National Bureau of Economic Research.

[Learn why for-profit students may earn less than their peers.]

Another study found that applicants with certificates, associate's degrees and other credentials from for-profit colleges fared no better in receiving callbacks from employers than those from much-cheaper community colleges.

"Our findings suggest that employers don’t value for-profit credentials any more than public community college credentials," says Cory Koedel, an associate professor at the University of Missouri and co-author on the study. "But for-profit credentials are quite a bit more expensive."

So what you are getting for all that money is valued by employers only as much as a much cheaper 2-year degree from a community college.

3. For-profit borrowers default at higher rates. The likelihood of a student defaulting at a for-profit college is nearly four times higher than at a community college and more than three times higher than at a four-year public or nonprofit college, according to a news release from the Institute for College Access & Success.

Default rates may stem from the combination of high loan balances and difficulty finding employment, says David Deming, an associate professor of education and economics of Harvard Graduate School of Education ​and co-author of the NBER study. "To the extent that you have trouble finding a job when you graduate, it affects your ability to pay student loans," he says.

 

[NewtonTrino]

I don't think the concept of a for profit college is flawed. However, I do think that in the current regulatory environment a lot of "colleges" have been created that wouldn't normally be able to exist. They are there for that super tasty federal loan money. Kill that stream of free money and you kill the colleges. Most of these "colleges" are simply diploma mills meant to suck in the loan money with no care about giving any value to their students. The students get stuck with the debt and without a good education to back them up. The entire system is unconscionable and I lay it clearly at the fault of the legislators who have created this perverse set of incentives.

So let's fix the environment (e.g. the super easy federal loan monies) and then we'll see what the landscape looks like.

Personally I think college in general is massively overrated and overly expensive btw, mainly because of the cheap loan money. For most people college at this point is a ripoff.

 

[Puppycow]

I don't think the concept of a for profit college is flawed. However, I do think that in the current regulatory environment a lot of "colleges" have been created that wouldn't normally be able to exist. They are there for that super tasty federal loan money. Kill that stream of free money and you kill the colleges. Most of these "colleges" are simply diploma mills meant to suck in the loan money with no care about giving any value to their students. The students get stuck with the debt and without a good education to back them up. The entire system is unconscionable and I lay it clearly at the fault of the legislators who have created this perverse set of incentives.

So let's fix the environment (e.g. the super easy federal loan monies) and then we'll see what the landscape looks like.

Personally I think college in general is massively overrated and overly expensive btw, mainly because of the cheap loan money. For most people college at this point is a ripoff.

Well, one possible response would be to crack down on the bad actors, which is what put Corinthian out of business. Tightening up rules on which institutions can have access to that money might also be an approach.

Cutting off the money itself though . . . how fair would that be from a generational standpoint? Students younger than some arbitrary age are just SOL and can't get the same help their older peers received?

It's kind of like the problem that leads to Medicare fraud and maybe giving unnecessary care because it's on the government's dime.

 

[marplots]

I wonder if they were far along enough in their studies to have heard of the invisible hand of the marketplace?

 

[NewtonTrino]

Well, one possible response would be to crack down on the bad actors, which is what put Corinthian out of business. Tightening up rules on which institutions can have access to that money might also be an approach.

I suppose so but that process will probably be politically hacked fairly easily. Personally wouldn't trust it. Besides it doesn't fix the larger problem.

Cutting off the money itself though . . . how fair would that be from a generational standpoint? Students younger than some arbitrary age are just SOL and can't get the same help their older peers received?

This assumes we are actually doing these kids a favor. We aren't. By giving out these loans we have caused a tremendous increase in the cost of education. At the same time the value of the education has been going down. Giving out loans to 18 year olds that nobody would ever give if they weren't government backed is a HUGE MAJOR PROBLEM and we are screwing an entire generation.

These loan programs need to be immediately reformed and mostly just killed.

It's kind of like the problem that leads to Medicare fraud and maybe giving unnecessary care because it's on the government's dime.

Except worse because we are leaving these kids in debt instead of just paying.

Honestly we are screwing an entire generation or two here and it's not going to end well.

 

[marplots]

Dear Mom and Dad,

Today in college I learned an important lesson: how to file a class action lawsuit.

Love,
Your son Skip

P.S. Please send money.

 

[Craig4]

One thought might be to force for profit colleges to back a certain percentage of their loans. If Corinthian was on the hook for a portion of the loans that defaulted they might be a bit more selective about the students they recruited and the quality of the education they provided.

 

[Aepervius]

This assumes we are actually doing these kids a favor. We aren't. By giving out these loans we have caused a tremendous increase in the cost of education. At the same time the value of the education has been going down. Giving out loans to 18 year olds that nobody would ever give if they weren't government backed is a HUGE MAJOR PROBLEM and we are screwing an entire generation.

And yet other country do it on regular basis.

You would be screwing far more people if you remove the possibility for people having no money to study. None of my sister and i would have been able to study without loan, and we all have good jobs. The problem you have , is that *religiously* people in america think for-profit private enterprise is a solution to everything.

Well it turns out subventionning higher education to keep cost low works better than letting for profit crop up and take their slice.

Like health care and other type of monopolies really, public subvention works far better than the failing-hand-of-the-market.

 

[Resume]

Hello Mudduh, Hello Faddah
Went to college
Now there's nada
Want to finish
but my credits, they don't transfer
so I'm looking for a job as a pole dancer

 

[NewtonTrino]

And yet other country do it on regular basis.

You would be screwing far more people if you remove the possibility for people having no money to study. None of my sister and i would have been able to study without loan, and we all have good jobs. The problem you have , is that *religiously* people in america think for-profit private enterprise is a solution to everything.

Well it turns out subventionning higher education to keep cost low works better than letting for profit crop up and take their slice.

Like health care and other type of monopolies really, public subvention works far better than the failing-hand-of-the-market.

What other country does it like the USA? In the USA the situation is this:
1) Almost anyone can get a loan backed by the government.
2) You cannot discharge this loan in bankruptcy.
3) Many people either don't finish their degree or get a degree in something where they cannot earn enough to pay back the loan
4) This has been getting worse rapidly because the cost of schooling has been rising much faster than inflation.
5) Ultimately this leads to a couple of generations starting life with HUGE debts that they can't hope to pay anytime soon. Therefore their income goes to that (if they have any) instead of things like getting married, starting a family and buying a house.

I'm not objecting to good public university educations, I'm objecting to the very very poor way it's implemented through these loans. This is quite possibly the largest problem young people have right now.

 

[AlaskaBushPilot]

Huh, I wondered if some contrarian would rise to defend the honor of for-profit colleges. No takers?

Absolutely.

At Alaska American College we are honored to announce our recent incorporation with emphasis on accepting near-degree students in our McWorld Studies Program.

 

[Wolfman]

And yet other country do it on regular basis.

Sorry, don't agree. Not even in the slightest. Yes, other countries give loans, but nothing like the nonsense in the U.S. In particular, these loans are guaranteed by the gov't, so anyone can get them, regardless of their ability to pay them back...but unlike most other kinds of loans, it is impossible to get rid of this one by filing for bankruptcy at some point in the future.

Add to that the fact that for-profit schools charge far higher fees than regular schools, and the result is that young people are accumulating massive debts for educations that, in many cases, won't even give them enough earning power to re-pay those debts.

Yes, giving loans can be a good thing. But not the current American system. Loans should be based on a realistic expectation that the person taking the loan has the ability to repay it. These loans should be subject to the same bankruptcy protection as most other kinds of loans.

In your case, you got loans that helped you...they provided money that enabled you to get good jobs, in amounts that were not crippling to you to repay. Now, consider if you'd had to take larger loans, for a much worse education...you really think that would have been a good or desirable thing?