United Education Reports Losses of $14.3 Million


United Education & Software, an Encino company that ran into trouble last year when authorities discovered a series of foul-ups at a United Education operation that serviced government-guaranteed student loans, said it lost $14.3 million in the year that ended Jan. 31.

The results are in contrast to a profit of $4.4 million earned a year earlier by the company, whose main business is operating vocational schools. Revenue in the latest fiscal year rose 15% from a year earlier, to $81.1 million, mainly because United Education operated more vocational schools and had increased enrollment at some of them.

The results for the latest fiscal year included a loss of $8.8 million from the discontinued student loan servicing operation and a loss from continuing operations of $5.4 million.


Included in the loss for the year is a provision for the sale or closing of nine vocational schools that were lagging in profits, the company said. United Education said it has sold six schools to International Training Corp., a private company in Denver, for an undisclosed amount.

Last year, a review led by the U.S. Education Department uncovered a series of problems in a United Education unit in Costa Mesa that serviced student loans. The problems included failure to properly contact thousands of delinquent borrowers. United Education blamed the problems on computer errors, although student- loan authorities said there was widespread sloppiness in the operation.

After the foul-ups surfaced, Education Department officials said the government would not pay for the bad loans that United Education had serviced. Bank of America, trustee for bonds that were sold to raise money to buy student loans, has said it and a group of major banks that issued letters of credit backing the bonds could lose as much as $650 million.

Last month, nine of the world’s largest banks, most of them in Japan, sued Bank of America, alleging that it failed to properly oversee United Education’s work.