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California college students displaced amid alleged financial aid scam

April 27, 2015

Amoney popular for-profit college chain is shutting down than two dozen campuses and displacing more than 10,000 California students. [LA Times]

Orange County company Corinthian Colleges Inc., which has operated the Everest, WyoTech and Heald college systems in California and other states announced the closures Sunday, giving almost no notice to students and employees. The closure of the campuses follows five years of government investigations into the college chain, litigation with the state of California and a $30 million fine imposed earlier this month by the U.S. Department of Education.

State and federal investigators accuse the college chain of falsifying job placement statistics in order to profit off a boom in government-offered financial aid that occurred during the recession. Likewise, the college system allegedly paid temporary employment agencies to hire students after graduation.

Corinthian Colleges’ profit nearly doubled to $1.75 billion from 2007 to 2011. As many unemployed workers sought financial aid and returned to school, the college chain hiked tuition, investigators say.

The Department of Education cut off Corinthian Colleges’ access to student loans last summer. The closure of the individual campuses was expected for months, even though the company waited to inform students and employees.

Students at the various campuses were working on associates degree, often in technical fields, like criminal justice. The schools are comparable to community colleges.

Displaced students can now attempt to transfer their units to other colleges. They can also seek student loan forgiveness from the federal government.


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Much as I hate say it, this is one area that could use a little Chinese justice. Just once or twice and we wouldn’t see this type of behavior again.

And for my Republican friends, this why we need some government regulation.


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“And for my Republican friends, this why we need some government regulation.”


Huh? WTH was that supposed to mean? There already IS government regulation against this and it didn’t stop it…and you are saying we need more? It was government involvement in the form of student aid that CREATED this mess.


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It was government aid with concessions to bankers who paid for them with campaign contributions. The student loan system has a couple of small but very important conditions that make it a travesty.


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I do not know anyone who is against “some” regulation. That sad, I have NEVER seen “some” regulation from government in the last 50+ years.


Still, one has to wonder, would this kind of scam occur if the government was out of college? That is, no financial aid, etc? I will bet you dollars to doughnuts that if there were no government checks coming in, the tuition would be MUCH lower, and the faculty actually held accountable and responsible for real teaching.


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Wow, if anyone thinks State Colleges are NOT for profit Colleges, you better do a bit more research.


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The Dark Side of higher education — private for-profit colleges.


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Careful with your generalizations. Stanford, Harvard, Yale and several other reputable institutions of higher education are private. They may not officially be “for-profit” but they are functionally so.


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Every time the government gets involved in handouts, scams are sure to follow.


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“Private business will be so much better at doing things than government can ever do!”

…until they rob the student off an education, tuition in this case, than fleece us taxpayers!


So much for the mantra of the right, which is so very often wrong. Just look at the Savings

& Loan scandals, BIG banks bail-out, Wall Street, Defense contractors… ad nauseam.


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Your comment is fairly accurate but it is only half the truth. The other half is that private enterprise is no better and sometimes worse. There needs to be a balance. If private enterprise was the province of angels, a libertarian type capitalist society might well succeed. If government were run by angels, it might also be a lot better. We have to deal with the real world however and that involves diligence in rooting out scammers and those who enable them no matter where they are found.


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