Chairman of the Senate Health, Education, Labor & Pensions (HELP) Committee Tom Harkin (D-IA) and Assistant Majority Leader Dick Durbin (D-IL) were among two of the six Democratic senators who yesterday sent a letter asking President Obama to take steps to ensure that the recent collapse of Corinthian Colleges, Inc. (CCi) does not repeat itself at other “publicly traded, for-profit colleges.”
In July, the Department of Education (ED) suspended Corinthian's access to federal student aid dollars by placing the school on heightened cash management. Just 21 days later,12 CCi schools were closed and another 85 were put up for sale.
“Corinthian College Inc.’s failure raises serious questions about the financial integrity of other similarly situated, publicly traded, for-profit colleges," according to the Senators who went on to express concern that ED did not have the necessary “information, resources, or the expertise” to properly assess Corinthian's financial situation.
The letter made reference to a briefing call in which a senior level ED official stated that the government’s financial monitoring system “didn’t work in the case of Corinthian” and that the system would need to be reviewed to figure out what had been overlooked. “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,” the letter said.
The letter, which was also sent to Secretary of Education Arne Duncan and other Administration officials, ended with a number of questions about the tools used to determine the solvency of publicly traded for-profit education companies in real-time. The letter also asks whether “goodwill accounting metrics” mask fiscal issues and what protections exist for veterans, servicemembers, and other beneficiaries that are less likely to participate in the Title IV programs.
“For the sake of all stakeholders, it is imperative that we receive timely information to these critical questions,” the senators said in conclusion.
Co-signatories of the letter include Sens. Chris Murphy (D-CT), Brian Schatz (D-HI), Jack Reed (D-RI), and Kay Hagan (D-NC).
Publication Date: 8/6/2014