California AG, U.S. senators want curbs on enrollment at troubled Corinthian Colleges

California AG, U.S. senators want curbs on enrollment at troubled Corinthian Colleges
California Atty. Gen. Kamala Harris wants an injunction that would prevent Corinthian Colleges Inc. from enrolling new students without disclosing the company's dire financial situation. (Eric Risberg / Associated Press)

A dozen U.S. senators asked the federal government to halt new student enrollments at an ailing Santa Ana chain of more than 90 for-profit colleges accused of misleading prospective students.

Calling Corinthian Colleges Inc. "one of the worst actors in the for-profit college industry," the senators, including Barbara Boxer of San Francisco, urged the Education Department to "immediately prohibit" any new enrollments at the school.

The senators and, separately, California Atty. Gen. Kamala Harris pointed out that Corinthian is continuing to recruit students without disclosing the company's dire financial situation.

Corinthian had said Monday that it would sell off or close most of its schools over the next six months, following a U.S. Department of Education crackdown in the face of widespread allegations that the company falsified job placement rates and deceived prospective students.

A department spokeswoman said staff members were reviewing the letter.

Harris' office is seeking a court order forcing the company to tell prospective students about the impending shutdown or sale of many company schools.

In a court document, state lawyers said Corinthian told Wall Street investors "about its serious financial troubles and about its plans to close or sell its campuses [but] refuses to share this same vital information with the vulnerable students and parents that it targets."

The filing points to Corinthian's Heald College online advertisements that called the school a "stable and permanent fixture." Other ads promised "career services assistance to our graduates, for life."

A hearing on the attorney general's petition, filed in a pending state case against Corinthian, is scheduled for next week in San Francisco Superior Court.

The company said in documents with the court that disclosures about its financial situation to prospective students would be "unprecedented" and "alarmist."

"The proposed notice would almost certainly drive away the vast majority of students considering enrollment and thus potential buyers, ultimately harming students, employees and taxpayers," the company said.

"The government appears to think that students will be best served by causing immediate panic and destroying any chance the school has of selling its campuses to buyers who will responsibly operate them," it argued.

More than 72,000 students are enrolled systemwide at Corinthian schools in 25 states and Canada.

Meantime, Corinthian must give the U.S. Education Department by Tuesday a list of schools it plans to sell or close after current students finish their course work.

Corinthian, one of the nation's largest for-profit college corporations, has suffered from declining enrollment and intense scrutiny from federal investigators and attorneys general in more than a dozen states.

The problems came to a head earlier this month when federal education regulators put a 21-day hold on the company's access to federal student aid — the source of nearly 85% of its revenue. Facing a severe cash shortfall, the company warned it might have to close down.

As part of the agreement to sell or close most of the schools, the Department of Education gave Corinthian a temporary cash infusion of $16 million to continue operations.