Federal and state investigators have long viewed Corinthian, based in Santa Ana, as one of the most problematic players in the troubled for-profit college industry, which has come under scrutiny for predatory marketing.
The student loan pipeline fueled the company’s rapid enrollment growth, peaking at more than 110,000 students in 2010. Corinthian charges students up to 10 times the cost of a comparable community college education. That requires many of them to take on more debt than they can repay — leaving taxpayers on the hook for mass defaults.
“It just made you feel dirty after a while,” said Tyrone Gaines, who worked in corporate marketing and training at Corinthian’s Santa Ana headquarters for three years ending last July. “They don’t make money; they take money from the taxpayers. That’s their whole business model.”
Corinthian spokesman Kent Jenkins declined to make company executives available for interviews. In a statement, he said there is “clear evidence that students at Corinthian Colleges are well served by their education.”
Jenkins cited a 61 percent overall graduation rate and a 69 percent job placement rate. Allegations of manipulating job placement rates are “without merit,” the company said.
Nearly 37 percent of students who left Corinthian’s schools in 2008 defaulted on their loans within three years, according to a Times analysis of federal student loan default data.
The reliance on federal money became a choke point last month, when the U.S. Department of Education suspended the company’s access to student aid, pushing Corinthian into a cash crunch. In a regulatory settlement, the company agreed this month to sell 85 of its 107 campuses and online programs, and close 12 others.
Only a fraction of Corinthian’s student body, now down to 72,000, will be eligible for automatic tuition refunds. Those attending the schools slated for sale won’t get their money back; students in programs targeted for closure can request a refund.
Corinthian typically charges $17,000 to $19,000 for a nine-month vocational certificate program, according to government filings. It charges an average of $40,000 for a two-year associate’s degree.
(Next page: “All smoke and mirrors”)
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