Updated: June 23, 2014 at 7:43 pm
SANTA ANA, Calif. - Corinthian Colleges and the U.S. Department of Education have reached an agreement that will allow the for-profit education company to receive an immediate $16 million in federal student aid funds and keep operating.
The announcement comes just days after Corinthian cautioned that it may have to shut down because of its clash with U.S. regulators over student data and at a time when Corinthian is looking to sell off some of its schools.
Corinthian - which owns the Everest College, Heald College and WyoTech schools - said last week that the Education Department had limited its access to federal funds after it failed to provide documents and other information. The Education Department said it heightened its oversight of the Santa Ana, Calif.-based company after requesting data "multiple times" over the past five months.
Kent Jenkins, a Corinthian spokesman in Washington, D.C., said the operations will continue as usual at the company's more than 100 campuses and 10 call centers in the U.S.
But as part of the agreement, Corinthian pledged to sell many of its campuses and wind down operations at other underperforming campuses that are under heightened scrutiny by the Education Department. Corinthian has sold or put on the market 13 of its campuses during the past year.
In February, Corinthian's Everest University laid off 105 of its 433 employees at its Colorado Springs call center, citing slowing enrollment in online classes. The center, which handles a variety of tasks that include academic, student and career services, opened in 2010 with plans to employ up to 600 within four years.
Everest also operates a campus at 1815 Jet Wing Drive that offers several programs, including accounting, business, nursing and massage therapy.
The federal agency has been investigating allegations of falsified job placement rates and other improprieties at Corinthian, and the company is the subject of lawsuits and investigations brought by state attorneys general in at least 15 states, including Colorado.
The Department of Education said Monday that Corinthian must provide enrollment documentation to back up the funding request. An independent monitor approved by the agency will review matters related to operations at Corinthian and will have full access to the company's financial and operating records.
Corinthian said that the memorandum of understanding reached with the Education Department will allow its schools to maintain daily operations without interruption. It serves about 72,000 students.
The company also disclosed that the Education Department is considering denying recertification or removing certification of institutional Title IV eligibility for certain Corinthian schools. Corinthian said many of its schools have provisional Title IV program participation agreements with the government, while other schools' agreements have expired or are about to expire.
Corinthian Colleges Inc.'s problems come as student enrollment at other schools run by for-profit higher-education companies have been declining amid heightened federal scrutiny of the industry's practices. This year, the Consumer Financial Protection Bureau sued ITT Educational Services, alleging that it pushed students into high-cost private loans knowing they would like default. The company denied the charges.
Several state attorneys general are also investigating various for-profit education companies.
Career Education Corp., which owns Colorado Technical University in Colorado Springs, shut down nine campuses this year in response to declining enrollment and to reduce operating costs. Losses by the Chicago-area company more than tripled in the first quarter.