The company that plans to buy 50 campuses of Santa Ana-based Corinthian Colleges Inc. said it would forgive $480 million in private student loans in exchange for federal approval for the deal, according to a news report.
Oakdale, Minn.-based nonprofit ECMC Group agreed in November to buy the campuses for $24 million. It said today that it would also pay $12 million to the U.S. Department of Education to cover loan write-downs, and as much as $17 million more over the next seven years in additional payments.
ECMC said in November it would cut tuition by 20%.
Zenith Education Group, the nonprofit subsidiary of ECMC that is set to operate the schools, agreed to hire an independent monitor for its recruiting practices—one of the key areas for which Corinthian has been criticized.
Zenith also named former Howard University executive Troy Stovall its interim president.
ECMC Chief Executive David Hawn said in a statement that the result will be “first-rate career colleges where … student complete their programs and get fulfilling jobs when they graduate.”
Some students who have received negative entries on their credit reports would have them removed, said the Consumer Financial Protection Bureau, and Zenith agreed not to offer its own private loans for seven years.
The agency released Zenith from any liability for Corinthian’s actions.
The 50 campuses will have about 33,000 students, the news report said.
Corinthian agreed in July to wind down its business and sell or close campuses and programs. At the time the publicly traded, for-profit schools operator had about 100 campuses with about 70,000 students. It has denied allegations of wrongdoing in student recruitment, job placement claims, and lending and debt collection.