Shares of Santa Ana-based vocational school operator Corinthian Colleges Inc. plunged Monday after a report showed few of its students are repaying federal loans, putting future aid in jeopardy.
Corinthian’s shares closed down more than 20% to a market value of about $460 million.
Late Friday, the federal Education Department released a report showing that fewer than 20% of students at Corinthian and some other for-profit school operators are repaying federal loans.
The department plans to use the loan repayment figures to determine whether school operators can remain eligible for federal loans.
Under a proposed rule set to take effect next year, students at for-profit schools would be cut off from federal loans if fewer than 45% of former students are paying off loans, or if the debt burden of former students is more than 20% of their income.
For-profit colleges have an average 36% student-loan repayment rate, according to an analysis of Education Department data by the Oakland-based nonprofit Institute for College Access & Success.
The repayment rate for public universities is 54%, while private colleges are at 56%, according to federal data.
Corinthian runs more than 100 campuses in the U.S. and Canada that offer degrees in healthcare, criminal justice and other areas.
The company and others saw big growth during the recession but have come under fire this year for students who took on more debt they couldn’t afford.
Corinthian’s Everest College, which offers degree in medical assisting, massage therapy, criminal justice, business administration and other areas, had one of the lowest repayment rates at 8%, according to federal data.
Besides loan repayment issues, Corinthian and others are under fire for alleged fraud by recruiters.
Earlier this month, a Government Accountability Office report found that recruiters at 15 colleges, including those run by Corinthian, misled students to boost enrollment.
