Agreement Reached For Corinthian Colleges
Corinthian Colleges, Inc. announced today that it has reached an agreement with the U.S. Department of Education that will ensure uninterrupted daily operations at its schools. This comes after the company disclosed last Thursday, June 19 that it was concerned about costs to the company due to restrictions placed on them, and they warned that they may have to close.
A Memorandum of Understanding was reached between Corinthian Colleges and the U.S. Department of Education which will allow the company to receive $16 million in federal student aid funds without waiting the 21 days recent restrictions would have required. This immediate availability of funds is expected to help the company avoid an immediate cash shortfall which could have caused the company to close its doors.
Under the terms of the memorandum, the two will enter into an Operating Agreement to allow Corinthian Colleges to proceed with its plan to pursue alternatives for its operations. The agreement is expected to be finalized by July 1, 2014.
The alternatives provided within the agreement include providing Corinthian to sell some schools to new owners and to teach out others. The company will be responsible for determining which schools will be Sales Schools and which will be Teach-Out Schools.
According to the form filed with the Securities and Exchange Commission, the company will begin operations to sell some schools soon after the Operating Agreement is reached, and the company intends to reach sales agreements within six months. In addition, some schools will be selected as Teach-Out Schools. Students at those institutions would be informed soon after the agreement is reached, and further enrollment for new students would be discontinued. At the Teach-Out Schools, students would be able to finish their education at the institution or transfer to another.
Also in the form filed with the SEC, Corinthian Colleges stated that the Education Department has indicated that it is contemplating denial of recertification or the removal of certification for Title IV eligibility at certain schools within the company. A spokesperson with Corinthian Colleges said today that it is not possible at this time to say which schools may not be reaccredited.
While Corinthian Colleges says the memorandum agreement is a step forward, they will still need additional sources of liquidity to fund operations. Corinthian hopes that during negotiations for the final Operating Agreement between now and July 1, they can work with the Department of Education to modify the 21-day delay for federal student aid funds.
For more information about Corinthian Colleges, visit their website at www.cci.edu.