ECMC Completes Purchase Of Everest University, WyoTech Campuses
Shortly after the Consumer Financial Protection Bureau reported that it secured $480 million in student loan relief for current and former students of embattled Corinthian Colleges Inc., Education Credit Management Corporation – the company seeking to purchase more than 50 campuses from the for-profit giant – announced it had completed the controversial $24 million transaction.
Zenith Education Group, a newly created member of ECMC Group, finalized its acquisition of 56 Everest and WyoTech campus from CCI, transitioning them from for-profit to nonprofit status, while creating a program that eliminates some of the schools’ worst performing programs and removing binding, mandatory arbitration from enrollment agreements.
When the million-dollar deal was first proposed in November, it was met with staunch criticism from lawmakers and student advocates.
Consumer groups have continuously questioned how the deal would affect students already reeling from CCI’s abusive practices. The groups also warned that the deal could be dangerous to current and future students if the new buyers were allowed to continue using binding mandatory arbitration clauses in student enrollment documents.
In an effort to gain the trust of consumers and advocates, the Post reports that Zenith has planned a series of overhauls to its new purchases, spending more than $200 million on new initiatives and programs in the next year.
The largest of the changes could be the removal of binding, mandatory arbitration clauses from enrollment agreements, a practice that has been heavily favored by for-profit institutions in the past, The Washington Post reports.
The use of arbitration clauses have skyrocketed by companies since 2011, when the U.S. Supreme Court affirmed that it was perfectly okay for companies to take away a consumer’s right to sue or their ability to join other wronged consumers in a class action case by inserting a paragraph or two of text inside lengthy contracts.
While the company removed the highly contested clauses, it does plan to keep in place a ban on class action lawsuits.
David Hawn, ECMC chief executive, tells the Post that “students have an unquestioned right to seek redress for grievances” and ECMC “will not stand in the way of any student who wants to pursue litigation.”
Still, consumer advocates tell the Post they are disappointed that ECMC upheld a ban on class action suits.
Other initiatives ECMC plans to implement include the creation of a new Student Choice Program, reductions to tuition costs and millions of dollars in new student grants.
Officials with Zenith says in a statement that the creation of the Student Choice Program is the first step toward improving student outcomes.
The initiative will phase out programs that do not meet acceptable job placement rates and will begin to assess other programs in need of improvement to increase job placement rates. Students in programs in either category will have three available options through a newly created Student Choice program: receiving a transfer voucher for all educational expenses already paid toward another course of study; receiving a full refund of all tuition and fee payments, should the student choose to withdraw from the school entirely; or continuing their program to completion as it is “taught out.”
The Post reports that ECMC already has plans to close three programs with poor completion and job placement rates, and cap enrollment at 70 others that are on the cusp of being deemed a poor performance program.
The company estimates that the Student Choice Program will apply to approximately 40% of current students.
In addition to eliminating poor performing courses, Zenith says it will put a new focus on job placement, by creating a new management position focused on building partnerships with local, regional and national employers.
“I could care less what our enrollment growth looks like, unless the growth is because word is getting around that you come to an Everest or WyoTech school you’re going to be placed in a well-paying jobs or field,” Hawn tells the Post. “Until then, we’re going to limit enrollment until we can demonstrate that we have the jobs ready for people when they finish their program.”
Despite the fact that nonprofit education institutions are exempt from the government’s proposed gainful employment rules, officials with the new company say they will voluntarily adhere to the stipulations.
In an effort to make higher-education at the campuses more affordable, Zenith says it plans to reduce tuition by 20% for all students enrolling at Everest campuses after February 2.
Everest students who continue in and complete their current programs will be eligible for the Zenith Graduation Scholarship — a non-need-based institutional scholarship providing a 20% tuition reduction, prorated for the student’s remaining time in the program. The scholarship will be awarded and applied as a non-cash payment against outstanding loans or tuition upon graduation.
Additionally, in lieu of institutional loans, Zenith will create an $87 million Zenith Student Grant program to offer up to $10,000 annually to students of Zenith-owned Everest and WyoTech schools who meet demonstrated financial need.
The grant program was established to replace the previous CCI Genesis loan program that allegedly pushed tens of thousands of students into $569 million worth of high-cost private student loans.
As reported earlier today, the company will provide $480 million in student debt relief to some current and former students as part of a deal with the Consumer Financial Protection Bureau and the Dept. of Education that removes liability from ECMC for CCI’s previous practices.
Zenith also plans to launch a new Transparency Center, where students will be able to access important information about their academic programs, job placement rates and other measures of their likely success.
Officials say the site will be updated regularly with improvements suggested by the student users.
Here’s how a debt collector plans to turn around failing for-profit colleges [The Washington Post]
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