Corinthian Colleges Fined $30M Over Falsified Job Placement Rates At Heald College

healdheaderThe Department of Education continued its crackdown on deceptive for-profit college practices Tuesday by levying a $30 million fine against embattled Corinthian Colleges Inc. – operator of Everest University, Heald College and WyoTech – over the use of misstated and inaccurate job placement rates to recruit students.

The Dept. imposed the fine and an order to no longer enroll students at CCI’s Heald campuses after an investigation found 947 cases of misstated placement rates in the Heald College system, which currently operates 12 campuses in California, Hawaii and Oregon.

The DOE investigation determined that Heald participated in a number of deceptive practices in order to supply students with inaccurate or incomplete disclosures about job placement prospects when they were deciding whether or not to attend the campus. The same misleading information was also given to the Department and CCI accreditors.

“Instead of providing clear and accurate information to help students choose which college to attend, Corinthian violated students’ and taxpayers’ trust,” Education Under Secretary Ted Mitchell, who led the investigation, said in a statement. “Their substantial misrepresentations evidence a blatant disregard not just for professional standards, but for students’ futures. This is unacceptable, and we are holding them accountable.”

According to the investigation, Heald paid temporary agencies to hire its graduates for as few as two days, in order to count those graduates as placed in their chosen career field.

The campus system also attempted to boost rates by counting placements that were clearly out of the student’s field of study as in-field placements.

In one instance, the Department says a Heald campus in Honolulu classified a 2011 graduate of an accounting program as employed in the field based on a food service job she started at Taco Bell in June 2006.

Another Heald campus counted a 2011 business administration graduate as working in their field of study based on a seasonal clerk position she obtained in Macy’s Shipping and Receiving Department during November 2010, despite the fact the position had nothing to do with her program and ended prior to her graduation.

Similarly, the Department found that Heald failed to disclose that its placements often included graduates whose employment began prior to graduation, and in some cases prior to even enrolling at the school.

According to Corinthian’s own data for 2012 graduates, over one-third of the graduates reported to have been “placed in field” started their jobs prior to January 1, 2012, and over one-quarter started their jobs prior to January 1, 2011.

However, in follow-up interviews with some of those students, they told the Department that their jobs were not related to their field of study, nor had they received promotions or increased responsibilities or otherwise progressed in those jobs because of their Heald education.

Finally, the investigation found that in some of Heald’s disclosures the school failed to state that it excluded students from placement rate calculations who the college said had deferred employment for one reason or another.

In one case, a criminal justice program claimed a placement rate of 100%, but Heald had classified almost 60% of the graduates as unavailable for employment.

Likewise, a medical assisting program claimed a placement rate of 100% based on 51 graduates having been placed. However, Heald had classified almost 43%, or 38 of the 89 total graduates of the program, as unavailable for employment.

In addition to fining CCI $30 million, the DOE has notified the company that it intends to deny pending applications to continue participation in the Title IV federal student aid programs at Heald campus locations in Salinas and Stockton, CA.

While the fine marks another step in the downfall of CCI, it provides little relief to the 70,000 of students left with nearly $1.4 billion in federal student loans after they were duped into attended CCI’s schools.

Despite calls for action from senators, states attorney general, consumer advocates and indebted students, the Department of Education has yet to provided significant monetary relief to federal student loan borrowers who enrolled at the crumbling for-profit education chain.

However, in its announcement of the latest fine, the DOE says it is working on a process to help CCI’s federal student loan borrowers submit a defense of repayment of their federal student loans. Defense of repayment is a little used system in which borrowers can seek debt relief if their school breaks the law.

The last significant relief CCI students saw came when the Consumer Financial Protection Bureau and the Dept. of Education reached a deal with Education Credit Management Corporation – the eventual buyer of more than 50 CCI campuses – to provide $480 million in forgiveness for current and former students who took out CCI’s high-cost private student loans.

U.S. Department of Education Fines Corinthian Colleges $30 million for Misrepresentation [Dept. of Education]

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