Everest University colleges at risk
TAMPA At four Everest University campuses across the Tampa Bay area, students are attending summer courses and enrolling for programs in massage therapy, master s degrees in business administration and everything in between.
What these students may not realize, however, is that Everest s corporate parent, Corinthian Colleges, is reeling financially, and has been forced by the federal government to sell or shutter its schools. Without a recent release of $16 million in federal funding, the once-profitable chain might have already closed its colleges doors.
California-based Corinthian has been under investigation by the U.S. Department of Education and several state attorneys general, including Florida s Pam Bondi, over allegations the company exaggerated job placement data and inflated grades and attendance in marketing claims to prospective students.
Those allegations join a litany of complaints from former and current students, from misleading recruitment pitches to unqualified and disinterested faculty, according to records in Bondi s office.
Corinthian s current troubles stem from January, when the Department of Education sought data on placement results, attendance and grade changes. Five months and five unanswered letters later, the department on June 19 slapped Corinthian with heightened financial oversight, which effectively froze federal financial aid money.
That money is the lifeblood of for-profit universities such as Corinthian s. The chain enrolls 72,000 students nationwide and takes in $1.4 billion in federal financial aid a year. The DOE put a hold on $16 million of that.
As a publicly traded corporation, Corinthian immediately filed documents with the Securities and Exchange Commission stating that if unable to obtain alternate financing, the Company s cash flows will not be sufficient to meet its obligations as they become due, which would cause the Company to be unable to continue as a going concern.
On June 23, U.S. Under Secretary of Education Ted Mitchell said the Education Department and Corinthian had agreed to a memorandum of understanding releasing the funding with the condition that Corinthian develop a plan to sell and teach out its programs across the country over the next six months. An independent monitor approved by DOE will oversee its finances and the sales process. Under a teach-out, a school ceases enrollment but faculty and staff remain in place until students complete their programs.
Facing disruption in the education of the 72,000 Corinthian students and the livelihoods of some 12,000 employees, the Education Department said it didn t have much of a choice. Students and their interests have been at the heart of every decision the Department has made regarding Corinthian, Mitchell said in a statement.
Kent Jenkins Jr., a spokesman for Corinthian, said administrators are in the process of completing an operating plan that will spell out what will happen at its Everest, WyoTech and Heald schools. Until it is complete, he said, he can t speculate on what might happen in the Tampa Bay area, except to say there has been no change in activity at the schools and that classes and recruitment have continued.
Everest has campuses in Tampa, Brandon, Lakeland and Largo. Its Everest University Online is based in the NetPark Tampa Bay complex on East Hillsborough Avenue.
From the time we started dealing with the issue that brought us to where we are, both the Department of Education and we have said that protecting the interests of students is a central priority, Jenkins said. The first principle that we agreed to in our memorandum of understanding that we signed last week was that we want to make sure students can continue their education without delay, interruption or additional cost.
Administrators at Everest s Tampa campus on Hillsborough Avenue declined to discuss the situation last week, referring questions to the parent company and directing a reporter off the property.
Corinthian declined to break out enrollment at individual sites. There are 10 Everest campuses in Florida.
Future enrollment is be ing allowed at Corinthian sites because it is believed they will be acquired and will continue as schools. Nonetheless, 12 U.S. senators have urged Education Secretary Arne Duncan to prohibit Corinthian from enrolling additional students. Florida s Bill Nelson was among the signatories, all Democrats.
The Corinthian schools here have also caught the attention of Attorney General Bondi, who is investigating Everest under Florida s Unfair and Deceptive Trade Practices Act.
The office would not comment on the case except to confirm that it is underway, but a case file illustrates the nature of the complaints.
Charlene Grayson, of Brandon, contacted Bondi s office when she discovered what she said were discrepancies in an accounting of her financial aid.
They think people aren t watching their financial aid, and I m one of those that did, Grayson told the Tribune.
The school had her responsible for $40,000 in financial aid, she said an amount that included such mysteries as attendance fees and room and board.
She said master s-level classes were taught by unqualified teachers and recruiters lied about the nature of the coursework.
They said all our programs were hands-on, Grayson said. Nothing was hands-on there. It just goes on and on and on.
Grayson now attends the University of Phoenix.
Tiffani Kovacs, who took online paralegal courses from Everest and now lives in Columbia, Missouri, told the attorney general s office she was informed her overall tuition would run $12,000 to $13,000. She said when she learned the actual bottom line would run about $50,000, she dropped out.
Kovacs has received a temporary deferment on about $20,000 of her debt but says collection agencies attempted to garnishee her paychecks.
They were after me. It was kind of a mess, Kovacs told the Tribune. The whole conversation that I had with the person who signed me up, I wish I would have recorded it. It was completely the opposite from what happened.
Other Everest students reported shock at student debt levels hitting $40,000 to $60,000.
A Polk County student who had a marijuana arrest reported that she was assured she could be certified and work in health care; she learned after completing her coursework that she could not.
Many complained that other schools did not recognize Everest s accreditation and their degrees were useless; one said she was told Everest was accredited just as Harvard is.
Jenkins, the Corinthian spokesman, said there is strong independent evidence that Corinthian s schools offer students a quality education and serve students well.
The AG s office is a state enforcement agency whose job it is to examine these matters. Unless the AG s office has found some merit in these complaints, it s deeply misleading to suggest they do have merit, Jenkins said.
With the company in regulators cross hairs, Wall Street has reacted. Corinthian shares traded in the $5 range in February 2012 but closed Thursday at 27 cents.
Corinthian is one of a number of for-profit college chains in hot water recently.
In December 2013, Education Management Corp., which operates Argosy University and The Art Institutes, among others, paid $3.3 million in restitution and fines to settle charges by the Colorado attorney general that it engaged in deceptive marketing.
Last summer, Career Education Corp., parent of Sanford-Brown and other schools, settled with New York state for $10.25 million over allegations it inflated graduates job-placement rates.
ITT Technical Institute has been sued by the Consumer Financial Protection Bureau over allegations of predatory lending practices, and the Federal Trade Commission is demanding information from DeVry University regarding its advertising and marketing practices.
In 2012, a two-year investigation of for-profit schools by the U.S. Senate Committee on Health, Education, Labor and Pensions produced what is known as the Harkin Report, a blistering condemnation of for-profit schools. It s named for committee Chairman Tom Harkin, a Democrat from Iowa.
The report concluded that half of students who enrolled in these colleges in 2008-09 left within four months; that the vast majority of students left for-profit schools with student loan debt that may follow them throughout their lives; and that the schools employ 2 recruiters for each support services employee.