Facts about Corinthian Colleges


Summary of findings from a report by the United States Senate Health, Education, Labor and Pensions (HELP) Committee: For-Profit Education: The Failure to Safeguard the Federal Investment and Ensure Student Success (July 30, 2012). Find the full chapter on Corinthian here.

Overview

  • Offers primarily 2-year degrees and certificate programs both online and at 105 campuses, operating under three brand names—Everest, Heald College, and Wyotech.
  • Student enrollment in 2011 totaled 94,000.
  • Highest tuition prices among the 30 companies examined, forcing students to borrow the maximum federal student aid and take on private debt.
  • 2012 Senate report concluded: “it is unclear that Corinthian delivers an educational product worth the rapidly growing Federal investment taxpayers and students are making in the company.”
  • In 2014, Corinthian reached an agreement with the Department of Education to sell or close all of its campuses (see below) and the Consumer Financial Protection Bureau filed a complaint against Corinthian because of its predatory practices involving private student loans.

Tuition

  • Cost for a diploma was among the highest and the cost of an Associate degree surpassed the next highest-cost school (ITT) by 17 percent.
  • Its tuition is also higher when compared to public colleges offering the same programs: Associate’s degree in paralegal studies at a Corinthian California campus costs 17 times more than the same degree at a nearby community college—$41,149 compared to $2,392.
  • Corinthian implemented a 12% tuition increase in February 2011 and, like much of the industry, increases its tuition regularly.

Federal Revenue

  • 83.1% of Corinthian’s revenue ($1.4 billion) was derived from taxpayer dollars—federal student aid plus military educational benefits.

Expenditure Priorities

  • Per student, Corinthian spent $3,969 on instruction in 2009, slightly more than the $3,463 it spent on marketing and allocated to profit.
  • The company paid its CEO $3.3 million in fiscal year 2009—more than eight times the compensation of the president of the University of California at Irvine.
  • The company’s compensation agreements make it clear that his pay is based on meeting enrollment and profit goals, not student success.

Recruiting Tactics

  • 22.5% of revenue ($294.7 million) was spent on marketing and recruiting in 2009.
  • Corinthian employed one recruiter for every 40 students while each career counselor was responsible for 145 students, and each student services staffer was responsible for 160 students.
  • Recruiters are trained to sell the program, not advise students and they are trained to dicourage/deflect prospective students’ questions about cost.

Academic Quality and Student Outcomes

  • Undercover GAO investigation raised serious questions about the academic quality of its online programs. Few of the courses featured video or audio lecture components and interaction with teacher limited to text-based chat that required little time or attention from the teacher.
  • In addition , GAO identified several incidents of compromised academic integrity and rigor. For example, blatant plagiarism was tolerated until the end of one class and finally reported to school administrators, but no disciplinary action was ever taken.
  • School spent $3,969 per student on instruction in 2009, among the highest of all companies surveyed, which paled in comparison to 4-year public and nonprofit colleges’ investments of $30,000-$35,000 per student.
  • Overall, 50.5% of students who enrolled in 2008-09 had withdrawn by 2010, having been enrolled a median of just over 3 months before withdrawing.
  • Its student loan default rate was 36.1% for students entering repayment in 2008, and, at 13 campuses, over 40% of students defaulted, which could result in the loss of federal student aid starting in 2014.
  • State Attorneys General have or are investigating Corinthian: (1) California attorney general entered into a settlement with Corinthian in 2007 after establishing that the company deliberately and persistently misled prospective students about the school’s placement rates by as much as 37%; (2) Florida attorney general was investigating school in 2012 or alleged misrepresentations concerning financial aid and unfair/deceptive practices regarding recruitment, enrolment, accreditation, placement, etc.
  • In 2010, school admitted that administrators at one of its Everest College campuses in Texas had falsified the employment records of 288 graduates over 4 years.
  • In 2012, the Consumer Financial Protection Bureau (CFPB) was investigating Corinthian to determine whether the company engaged in “unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.”

2015 Update

  • September 2014 CFPB complaint alleged it instituted “above market price increases to create ‘funding gaps’” in order to meet the requirements of the 90/10 rule. By statute, a for-profit school may receive no more than 90 percent of its revenue from federal student aid. By increasing tuition, Corinthian caused students, who otherwise would have been able to pay for the entire cost of tuition through federal student aid, to take out private student loans.
  • Department of Education (ED) threatened to delay disbursement of federal student aid to Corinthian in June 2014 because school had failed to address concerns about falsifying job placement data used in marketing and allegations of grade alteration. Corinthian indicated that it would be unable to pay its bills if the funds were delayed because its lenders were unwilling to extend additional credit. The chain signed agreement with ED requiring development of plan to either sell or “teach-out” all of its programs.
  • In November 2014, Corinthian proposed selling 56 campuses to Education Management Credit Corporation (ECMC), a debt collector and loan servicer. ECMC lacks any experience running an institution of higher education and its reputation for aggressive loan tactics make enforceable safeguards for the proposed sale all the more essential. The terms of the proposed sale to ECMC would not give students the choice of completing a degree at their current campus or making a fresh start at a different institution.
  • July 2014 Senate HELP Committee report found: (1) 50% of its programs would fail or were at risk of failing ED’s proposed Gainful Employment test; and (2) its share of the $3.2 billion that 10 for-profit schools received from Post-9/11 benefits from 2009 through 2013 was $186 million.
  • Corinthian reported that it spent $396 million on marketing and recruiting in 2013 an increase of 20% from the $328 million it spent in 2010.
  • Although currently on the verge of ceasing operations, it almost tripled the amount of Post-9/11 GI Bill benefits it received between 2009-10 and 2012-13.
  • In October, Wisconsin filed a lawsuit alleging that the school’s Everest brand misrepresented information, like graduation rates and job-placement statistics, in order to attract students