Dear Mr. President:
In light of the financial collapse of Corinthian Colleges we write to express our serious concern with the financial integrity and stability of a number of companies operating large for-profit colleges and ask for an expedited response to a number of important questions this issue raises.
The recent announcement that Corinthian Colleges Inc. will largely cease operating while currently serving over 70,000 students has revealed a startling lack of liquidity and an unacceptable reliance on federal financial aid dollars for day-to-day operations. It is also extremely troubling that recent press accounts revealed that the Department of Education did not have ample information, resources, or the expertise needed to properly assess Corinthian’s dire fiscal condition. Though financial analysts were well-aware of the precarious financial situation of Corinthian, the Department apparently was not. As one Department of Education official noted in a recent press article, the government’s financial monitoring system “didn’t work in the case of Corinthian." Even with the receipt of billions of taxpayer dollars, it is simply remarkable that Corinthian was unable to continue operations in the absence of additional federal financial aid funds for a mere three weeks.
In broader terms, Corinthian Colleges Inc.’s failure raises serious questions about the financial integrity of other similarly situated, publicly traded, for-profit colleges. The Department’s own records indicate that more than 23 additional companies that enroll 4,000 or more students currently have failing or close to failing financial integrity scores. One publicly traded company, ITT Tech, for instance, has already notified investors of significant financial concerns. Given that students attending such schools, including Corinthian, hold a combination of Title IV, institutional, and other private loans, we believe it is absolutely critical to protect these students from a repeat of Corinthian.
To this end, we urge particular attention to the process by which the Administration, and especially the Department of Education, gauge the financial integrity and hold these institutions accountable for their fiscal irresponsibility. With these concerns in mind, we urge you to provide answers to the following questions:
Unfortunately, we are just beginning to understand the true ramifications to students and taxpayers of the Corinthian house of cards. For the sake of all stakeholders, it is imperative that we receive timely information to these critical questions.
cc: Hon. Arne Duncan, Secretary of Education
Hon. Mary Jo White, Chair, United States Securities and Exchange Commission
Hon. Jacob J. Lew, Secretary of the Treasury
Hon. Rich Cordray, Director, Consumer Financial Protection Bureau
Cecilia Muñoz, Director, White House Domestic Policy Council
Jeffrey Zients, Director, White House National Economic Council
Hon. Sean Donovan, Director, Office of Management and Budget
