A Minnesota nonprofit will pay $24 million to buy a collection of for-profit colleges that spans more than a dozen states.
A new subsidiary of Oakdale-based Educational Credit Management Corp. will buy the 56 campuses from Corinthian Colleges. The subsidiary –called Zenith Education Group – will get Everest and WyoTech campuses in 17 states, as well as Corinthian’s online programs.
The Pioneer Press reports the programs enroll more than 39,000 students, including about 300 Minnesotans who attend class on four campuses. The sale, which was approved by the U.S. Department of Education, is expected to close in January. It's dependent on the approval of federal and state regulators.
Corinthian Colleges came under scrutiny after it was accused of falsifying job-placement data and misleading students about the value of their degrees. In July, Corinthian agreed to sell its schools after the Education Department froze the chain's access to federal student loans, putting it in financial jeopardy.
The Huffington Post noted the purchase presents the opportunity for ECMC to transform itself into an education company. ECMC has no experience running colleges, the story said, adding that currently, ECMC is paid by the federal government to battle distressed borrowers who seek to discharge their federal student loans in bankruptcy.
The Wall Street Journal's story included a comment from a consumer advocate who expressed concern about ECMC’s track record as a debt collector.
“It’s extremely disappointing,” Maura Dundon, senior policy counsel at the Center for Responsible Lending told the Journal. “This is a company with a poor record in what it does do. … It has no background in providing educational services.”
The ECMC Group plans to convert the Corinthian schools into nonprofits and cut tuition for most new Everest students by 20 percent. The organization also said it would improve students' completion and job placement rates.
David Hawn, CEO of ECM, said it will hire a new management team to run the schools.
"We will operate the largest group of nonprofit career schools in the country," Hawn said. "We are really focused on helping students succeed."
Legal actions against Corinthian are expected to continue. The Wall Street Journal reported the company disclosed that it received grand jury subpoenas from U.S. Attorney offices in three states.