Washington, DC - Zenith Education Group, a newly created nonprofit provider of career school training, announced earlier today that it had finalized its acquisition of more than 50 Everest and WyoTech campuses from Corinthian Colleges Inc., a transaction that was first announced in November.
The deal will allow nearly 30,000 students to pursue their career goals without disruption, and will give those students the opportunity to complete their education under new management that is set to implement a new plan to improve the education of its students.
"We recognize the hard work that thousands of students have undertaken to improve their lives and we want to do whatever we can to make sure those efforts don't go to waste. That's why the Department has kept students' best interests at heart in every decision made about Corinthian." said Under Secretary Ted Mitchell. "We're confident students will be safeguarded by the strong and bold commitments Zenith has made, which include offering students high-quality career training and counseling, improving affordability by reducing tuition and providing grant aid to students, and focusing on student outcomes."
In June, the Office of Federal Student Aid (FSA) office placed Corinthian on an increased level of financial oversight after the company failed to respond to the Department's repeated requests for answers about questionable practices. Following further investigation, the Department ordered the for-profit company to sell and prepare to wind down all of its programs. After a diligence process, Corinthian and ECMC Group, of which Zenith is a member, agreed in November to the purchase and sale of approximately 50 Corinthian schools. The Department supported Zenith's purchase and by stepping in to avoid a sudden shutdown of Corinthian, the Department ensured that students had the opportunity to continue their education with minimal disruption and with significant savings in taxpayer investments. Between the fall and today, Zenith acquired the approvals of the state authorizing agencies and accreditors of the schools it is acquiring.
As part of the terms of the sale, the parties agreed to pay $12 million in up-front payments that will be used to benefit Corinthian students and up to an additional $17.25 million in earn-out payments to the Department over the next seven years that will also be used to benefit Corinthian students. The Department is proud to announce today that, in conjunction with the Consumer Financial Protection Bureau, it is using a portion of those proceeds for more than $480 million in loan forgiveness for borrowers who took out Corinthian's high-cost private student loans. The hundreds of millions of dollars' worth of private loan forgiveness will serve to help past Corinthian students also make a fresh start.
In addition to the immediate changes announced today, Zenith also agreed to a series of conduct provisions as well as previously announced plans to voluntarily hire an independent monitor to ensure Zenith operates with integrity and transparency and in compliance with federal regulations and agree with several conduct provisions to protect students.
Furthermore, in the months since the announcement of the sale, Zenith has agreed to implement a series of improvements to improve outcomes, strengthen career training, and ensure accountability and transparency. These improvements include a student choice program (including refund options) that will apply to approximately 40 percent of its current students; an immediate 20 percent tuition cut and new scholarships and grants; a pledge to adhere to the Department's gainful employment rules and a renewed commitment to accountability and transparency which will be governed by their independent monitor.
To ensure that students understand the transaction and its ramifications, starting today, FSA will also reach out directly to the approximately 30,000 former Corinthian students who are now enrolled at Zenith to inform them of the ownership change and what the transition means for them. Additional information and updates, including documents relating to the terms of the deal, will be available at www.studentaid.ed.gov/Corinthian.
Throughout, the Department has sought a wind down of Corinthian Colleges that protects students, protects the investment taxpayers have made in their success, and creates opportunities for students to finish what they started. The Department has also sought a resolution that, where possible, establishes a strong and ongoing platform for high quality career education in the future. Today's announcement by Zenith and Corinthian is a major and positive step in these directions.
This release has been updated to clarify terms of the payment and earn-out.
