Category: National News

Washington, DC - The U.S. Department of Education announced its support today of an agreement between ECMC Group and Corinthian Colleges Inc. for ECMC Group’s newly formed nonprofit education entity, Zenith Education Group, to acquire 56 Everest and WyoTech campuses for transition to nonprofit status. While the transaction is now subject to the approval of Department officials, state authorizing agencies and accreditors, the transaction means that nearly 40,000 of Corinthian’s students can continue their education without fear that their school will suddenly close.

“Thousands of students can now rest assured that they will be able to pursue their education and have more stability in the midst of this school year,” said Under Secretary Ted Mitchell. “We are glad that Corinthian has reached an agreement with ECMC Group and believe that this transition will allow students to maintain progress toward achieving their educational and career goals and protect taxpayers’ investment, while Corinthian moves out of the business. We are pleased to help students transition from a problematic for-profit company to a nonprofit that is committed to giving students a new start and more opportunities for success.”

In June, the Department’s Office of Federal Student Aid placed Corinthian Colleges Inc. on an increased level of financial oversight after the company failed to address concerns about its practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance. As Corinthian announced in July, the company agreed to gradually wind down activity as part of an operating agreement with the Department. In addition, the enforcement actions against Corinthian, which have been brought by various state and federal agencies, including the Department, will continue.

As ECMC Group noted in its news release today, to further the Department’s and ECMC Group’s shared commitment to help students, once the transaction is finalized, ECMC Group will take additional steps to strengthen programs and protections for students, including:

The Department is receiving $12 million from the transaction negotiations and up to an additional $17.25 million earn-out over the next seven years, all of which will be used to support students. Corinthian will also retire all of institutional Genesis student loans, which it currently holds.

By stepping in to avoid a sudden shutdown and requiring Corinthian to sell and prepare to wind down its programs, the Department was able to ensure students have the opportunity to continue their education with minimal disruption and significant savings in taxpayer investments. Under the Higher Education Act, the Department is responsible for ensuring the effective administration and oversight of the approximately $150 billion in federal student aid that is disbursed each year.

While there are additional steps over the coming weeks before the transaction can be finalized, the Department will continue to work closely with the independent monitor, Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates, under the leadership of former U.S. Attorney Patrick Fitzgerald, to ensure Corinthian’s students have an orderly transition and can make informed decisions about their futures.

The full list of schools that ECMC Group intends to buy is here.

As part of the Obama Administration’s efforts to ensure that all students have the opportunity to pursue a quality education that leads to good outcomes, the Department has recently announced a federal interagency task force to help ensure proper oversight of for-profit institutions of higher education, which will be led by Under Secretary Mitchell.