Corinthian Colleges Shutdown: For-Profit School Network's Closure Leaves Students Uncertain About Their Education, Futures

Breeanna Heward learned Sunday that she was no longer a college student in the most unexpected of ways: via a text on her cell phone. “This is an important message,” it began. “Your college, including online classes and all campuses, has been permanently closed.”

Heward, 24, was devastated. She knew her school, Heald College - San Jose, had been in trouble recently. She also knew its parent company, Corinthian Colleges Inc., had put the 150-year-old for-profit campus network up for sale under an agreement with the federal government. But Heward, who loved Heald for its professors and opportunities for a better life, held on to the hope it would pull through.

That dream died when her phone buzzed Sunday with the news that negotiations had failed. "I broke down," she said. “Everything I had going for me got ripped out from underneath me. I felt like I lost my job, like I got laid off."

Heward was one of 16,000 students left in uncertainty this week by the news that Corinthian, once one of the biggest for-profit college corporations in the United States, suddenly shut down its remaining campuses after years of lawsuits, fines and investigations. Students now face a difficult decision: Drop all of their class credits and get their loans discharged, or try to transfer in hopes of landing jobs in a society that increasingly devalues for-profit education. Experts say Corinthian students’ best bet might be to start over completely, but for people like Heward that’s easier said than done.

How Corinthian Fell Apart

Corinthian has had problems for years, mostly stemming from its aggressive recruiting techniques, allegedly rigged job placement rates and predatory lending practices. In 2007, the company had to pay $6.5 million to settle a lawsuit over false advertising, and then the Obama administration joined the fight, as for-profit colleges can receive up to 90 percent of their revenue from federal aid.

Last summer, when Corinthian had 72,000 students at roughly 100 campuses nationwide, the Education Department ordered the corporation to shut down 12 campuses and sell the other 85. In February, the Zenith Education Group bought 56 and agreed to transition them into nonprofit schools.

From that time until Sunday, Corinthian negotiated with buyers interested in taking over its remaining campuses. This process became more complicated earlier this month, when the government fined the company nearly $30 million for misleading students.

That was the proverbial nail in the coffin for Corinthian. CEO Jack Massimino made the call to close all branches of Heald College, Everest College and WyoTech. “Unfortunately the current regulatory environment would not allow us to complete a transaction with several interested parties that would have allowed for a seamless transition for our students,” he wrote said in a statement.

Keep The Credits, Risk The Transfer

To help with that transition, Corinthian campuses held sessions Wednesday and Thursday where students could pick up their transcripts and discuss applying to other schools. Representatives from the City College of San Francisco, National University and William Jessup University attended to give Corinthian students information about how to apply to their schools.

Transferring may seem like the obvious choice, but Michael Reilly, the executive director of the American Association of Collegiate Registrars and Admissions Officers, said it's complicated.

To begin with, Corinthian's WyoTech and Everest campuses were nationally accredited. Generally, that means regionally accredited institutions -- like most state colleges and universities -- won't accept their credits. Heald College - Stockton student Daniela Mejia, 19, said she's afraid she could end up repeating classes she has already taken.

In addition, some of the places that will take Corinthian credits are under heightened cash monitoring by the Education Department. Many of the others are themselves for-profit institutions, like the University of Phoenix and Kaplan University.

Students need to be careful with these decisions, especially because what happened with Corinthian could happen again, said Maggie Thompson, campaign manager for Higher Ed, Not Debt. "We're really concerned that students are going to see that list of teach-out options and think that they are solid bets," she said, adding that students should instead look into enrolling in local community colleges.

Lose The Loans, Sacrifice The Credits

On the other hand, most Corinthian students upset by the shutdown can have their federal loans forgiven under a closed school discharge. But students aren't eligible if they enroll in a comparable program to complete the education they began at the closed school.

That set of rules presents a conundrum because for-profit colleges usually attract nontraditional students, such as working parents and veterans, who often attend classes on nights and weekends. Starting over could be a huge setback, especially for students like Heward, who has spent the past four years in and out of domestic violence shelters. She was just five classes away from graduating with an associate degree.

Heward said she doesn’t think it’s fair she has to keep paying, but she also doesn’t want her work to go to waste.

Corinthian students' debt made the news recently when a group of alumni calling themselves the Corinthian 100 announced they would not pay back their loans. They said the federal government should wipe out their debt because it enables for-profits' predatory lending practices. Groups of lawmakers, including Sen. Elizabeth Warren, D-Mass., and Sen. Dick Durbin, D-Ill., have repeatedly asked the Education Department to forgive Corinthian students' loans. The average graduate of a for-profit college has about $14,000 in student debt.

Lakisha Lewis, a 24-year-old who attended Heald College - Stockton, was due to graduate with her second degree in July. She wants to work as a fashion designer, and she's determined to finish this step in her education so she can attend the Art Institute of Sacramento. If she applies for a closed school loan discharge, she’ll lose more than two years of classwork. "I came too far to give up now," she said.

An Uncertain Future Regardless

It’s possible some students could get lost in the shuffle -- have their loans discharged but not go back to school or keep their credits but never graduate from their transfer school. “If I were a student, I would find this highly discouraging,” Reilly said. “I could imagine a number of folks saying they gave it a shot and it didn’t work.”

No matter what students do, they could still run into problems if they list their Corinthian experience on their résumés. The company had a questionable reputation even before the shutdown, earning headlines that slammed the schools for producing unskilled graduates. Lewis said she worried that employers would consider that when she interviews with them. "My biggest fear is to apply for a job, and they see that I have that degree from Heald and they don't hire me because of it," Lewis said.

Debra Pepper, who through Monday worked as the medical program director at Heald College - Rancho Cordova, argued that media narrative was one-sided. She called the situation horrible but said she was proud of her work.

"Our students were happy," Pepper said. Now, "they don't know what to do."