Corinthian Colleges must disclose financial woes under agreement with California AG

An ailing Orange County for-profit college company must do more to warn students about its dire financial situation under an agreement reached this week with California Atty. Gen. Kamala Harris.

Facing federal financial sanctions, Corinthian Colleges Inc. announced earlier this month that it would sell off 85 of its 107 online and ground schools, and close 12 others. But Harris’ office argued that Corinthian was continuing to recruit new students in a “false and misleading” way by not disclosing its uncertain future.

Under an agreement reached Thursday, Corinthian must now post disclosures online about the pending sale of its schools and clearly tell current students that schools will be sold.

The company must also remove advertising references describing the company’s schools as “stable and permanent” institutions that offer “lifetime” career services. And within two weeks, Corinthian must provide disclosures on its military-related websites that its California schools are no longer eligible to receive GI Bill benefits.

The new consumer information builds on several other disclosures required by the U.S. Department of Education. That agreement did not require that disclosures be posted online or be given to current students at schools up for sale.

Harris’ office had filed for an injunction in San Francisco Superior Court that would have forced greater disclosure, but the matter was delayed until August.

After this week’s agreement with Corinthian, the attorney general’s office will pull the request for an injunction.

Harris sued Corinthian last fall, alleging the company engaged in a wide range of misleading recruiting and job placement tactics. That case is ongoing.

A Corinthian spokesman, Kent Jenkins, noted that Corinthian already requires new students to read and sign a form acknowledging the potential sale of the school and other “investigative and oversight activities.”

“Corinthian Colleges has voluntarily – and without direction from the attorney general’s office – worked to address student concerns,” Jenkins said in a statement. “We have been providing clear disclosures regarding the pending sale of our schools and we will continue to do so.”

Corinthian, which operates schools under the Everest, WyoTech and Heald brands, has been in the cross hairs of federal and state investigators for more than a year amid allegations that the company manipulated job placement rates and other academic data.

The U.S. Department of Education last month put a 21-day hold on Corinthian’s access to federal student loans and grants, which make up nearly 85% of the company’s revenue. The cash crunch led to the agreement earlier this month to sell off or close most of Corinthian’s schools.

All of the company’s California schools will be sold.