Corinthian Colleges Inc. will try to shed most of its more than 100 campuses in the United States and Canada and end programs at the others under a deal with the U.S. Department of Education.
The Santa Ana-based for profit school operator agreed late Thursday to try and sell or close schools under its Everest, Heald and Wyotech brands. It also operates QuickStart Intelligence, an online information technology school.
The education department agreed to release $35 million in federal financial aid funds to begin the plan to sell or shut down schools.
The plan takes effect tomorrow.
In June the department restricted Corinthian’s access to student financial aid, and the company said it would run out of money.
The department and other agencies had been investigating Corinthian’s advertising and job placement claims, and whether it had manipulated records to receive federal funding or misled students regarding student loans.
The company said it had complied with investigations and had not manipulated records or misled students.
Corinthian enrolls 72,000 students nationwide, who receive $1.4 billion in federal financial aid annually.
A stop-gap deal calling for this broader plan released $16 million in federal funds and Corinthian’s lenders let it access the last $9 million available under loan covenants.
Now Corinthian will begin to inform students of its plan to sell and close campuses. It will immediately halt enrollment at schools slated for closure, allow students to withdraw with refunds, and hire an independent monitor to supervise its actions.
Corinthian will be required to set aside at least $30 million to pay refunds. The money could come from the sale of campuses or from future financial aid released by the education department, according to reports.
By July 15 Corinthian must also turn over all data the department had sought in its investigations.
The company reported a $79.6 million loss on a 12% drop in revenue in the first quarter.
Corinthian shares were down 20% in midday trading to $0.22 and a market cap of $19.72 million.
It said this morning it had received a delisting notice from NASDAQ.