Corinthian Colleges Inc. said Thursday that it has agreed to sell off 56 campuses for $24 million to a nonprofit entity that collects student-loan debt on behalf of the federal government.
The deal between Santa Ana-based Corinthian and Educational Credit Management Corp., a so-called student-loan guaranty agency, represents a large share of Corinthian’s campuses. In July, Corinthian agreed to sell off 85 campuses and wind down operations at 12 others as part of a settlement with the U.S. Department of Education.
Corinthian has been in the cross hairs of federal and state authorities over the past year amid allegations that the company falsified student job-placement rates and misled prospective students by persuading them to take on too much debt. The U.S. Department of Education temporarily suspended the company’s access to federal student aid in June, which brought the company to the brink of collapse.
Corinthian agreed to sell off the vast majority of its schools in July, in exchange for temporary cash transfers. But the company had not announced any sales until Thursday.
The deal is contingent upon approval by the Education Department and other regulatory agencies.
Education Department Undersecretary Ted Mitchell said the agency supported the sale of the Corinthian schools.
“Thousands of students can now rest assured that they will be able to pursue their education and have more stability in the midst of this school year,” Mitchell said in a statement. “We are pleased to help students transition from a problematic for-profit company to a nonprofit that is committed to giving students a new start and more opportunities for success.”
Most of the money in the $24 million deal will not go to Corinthian. Of the total, $12 million will go to the Department of Education, $8.5 million will be placed in escrow to handle any outstanding liabilities and the remainder will go to Corinthian.
The deal involves 56 Everest College and WyoTech campuses in 17 states. ECMC Group, the nonprofit that will take on the Corinthian schools, also agreed to acquire 12 schools that will wind down operations once current students graduate.
Corinthian will still own 12 Heald College campuses, 13 Everest and WyoTech campuses in California and 14 Everest campuses in Ontario, Canada, which together serve about 20,000 students. Corinthian said it was still seeking buyers for those campuses.
David Hawn, President and Chief Executive of ECMC Group, said in a statement that the nonprofit would work to reduce tuition and improve job placement at the schools.
“We are bringing our resources to bear to transform Everest and WyoTech into schools that are synonymous with student success — measured by strong program completion and job placement rates,” Hawn said.
Jack Massimino, Corinthian’s chief executive, said in a statement that students would benefit from ECMC’s “goal of making a positive difference in career education.”
As a student-loan guaranty agency, ECMC is largely known for collecting student debt on behalf of the federal government and has been accused by critics in the past of using harsh tactics.