Two Major For-Profit Education Chains Announce Closures, Sales Of Dozens Of Campuses

The for-profit education sector is getting a bit smaller after two of the largest proprietary college chains – Career Education Corporation and Education Management Corporation – revealed plans to close or sell dozens of campuses across the country.

Career Education Corporation – which operates a wide range of for-profit programs including those for adult learners and career colleges – announced Wednesday that it would close or sell all of its campuses with the exception of its University Group.

The company said in a statement that the sale and closures are part of a broad restructuring plan to “focus its resources and attention on its universities – Colorado Technical and American InterContinental – where the company has significant opportunities to continue to provide quality higher education to the adult student market.”

CEC will close all 14 branches of its Sanford-Brown and Sanford-Brown Institute campuses and sell its Briarcliffe College, Brooks Institute and Missouri College brands, affecting roughly 8,600 currently enrolled students.

The company plans to immediately begin teach-outs for both Sanford-Brown campuses and online programs. Under such programs, the campuses will continue to offer courses, student services and placement assistance until all current students have graduated. However, no new enrollments will be granted.

The gradual discontinuation of the schools is expected to take 18 months or longer, depending on the programs.

As for the sale of Briarcliffe College, Brooks Institute and Missouri College, CEC says it has signed a definitive agreement to sell Brooks Institute, the deal is currently pending accredit or and regulatory approval but is still looking for buyers for the other campuses.

“Discussions with interested parties continue for Briarcliffe College and Missouri College,” the company said. “Institutions that are not sold will be taught-out.”

This isn’t the first time that CEC has sloughed off some of its campuses. Back in 2012, the company closed 23 of its 90 schools and recently put its LeCordon Bleu brand of cooking schools on the sales block.

Many of CEC’s previously school closures followed enrollment declines based on the company’s regulatory and legal challenges stemming from accusations it inflated job placement rates for its graduates. Those issues and financial difficulties led the company to be placed on the Department of Education’s Heightened Cash Monitoring list this year.

The company was placed on the lowest tier of monitoring, Cash Monitoring 1 (HCM1), in which the college receives federal student aid funds from the government through an advance payment system.

CEC isn’t the only major for-profit chain looking for a turnaround, Education Management Corporation also announced Wednesday that it would shut down 15 of its 52 Art Institute campuses across the country, the Pittsburgh Business Times reports.

The closures mainly involve off-site learning or branch locations in cities where the company has more than one Art Institute location.

In all, the closures will affect nearly 5,400 students at campuses in Georgia, Ohio, Texas, Florida, Missouri, Michigan, New York, Utah, California, Washington D.C., Wisconsin and Pennsylvania.

Campuses on the chopping block will undergo a teach-out program, which allow currently enrolled students to complete their course of study. The process is expected to take two to three years to complete.

The company says that when possible students at Art Institute campuses slated for closure will be invited to transfer to another location.

“Our primary concern is ensuring that currently enrolled students receive a high-quality education that will equip them with the skills and expertise they need to earn a meaningful return on their educational investment,” a spokesman for the company tells the Business Times.

EDMC came to the decision to close the campuses as a matter of realigning the organization with the realities of the education environment, the spokesman says.

“That alignment demands a comprehensive and strategic examination of our schools and programs to ensure we are fully focused on providing the best student, graduate and employer outcomes,” he tells the Business Times. “As a result of that examination – and as the next step in our transformation – we, together with the respective local boards of trustees, have made the difficult decision to cease new enrollments at a select number of our institutions.”

Like Career Education Corporation, EDMC – which is partially owned by Goldman Sachs – has faced its share of issues in recent years, from falling enrollments and financial difficulties and increased scrutiny from state and federal regulators.

Back in 2011, the company was sued by the U.S. Department of Justice and four states. That lawsuit accused the company of violating a federal law against paying recruiters based on the number of students they manage to enroll.

Also like CEC, EDMC was revealed to be on the lowest tier of the Dept. of Education’s Heightened Cash Monitoring list this year.

EDMC and CEC’s decision to either sell or close campuses is just another sign of issues plaguing the for-profit college industry.

In recent years, the industry has come under stern scrutiny from federal regulators and law makers. The past five years have been punctuated with changes to schools’ often excessive advertising budgets, damning reports of abuse, and soon-to-be-implemented rules requiring for-profit programs to demonstrate their effectiveness.

Perhaps the largest indicator of change for the industry was the prolonged collapse of former for-profit heavyweight Corinthian Colleges Inc., which just last week closed its remaining campuses and filed for bankruptcy.

Illinois Senator Dick Durbin, who has led a charge aiming to protect students from the allegedly deceptive for-profit sector, said in a statement [PDF] that the recently announced closures and sales of EDMC and CEC schools is likely a sign of things to come.

“I have said many times, the collapse of Corinthian Colleges was the canary in the coal mine for the for-profit college industry,” Durbin said. “The continued upheaval in the wake of Corinthian’s collapse is a long-overdue reckoning for an industry that profits off of students while sticking them with a worthless degree and insurmountable debt.”

EDMC to close 15 Art Institute locations [Pittsburgh Business Times]
Career Education Corporation Announces Strategy to Focus Resources on Its University Group [CEC]