New Owner Of 56 Former Corinthian Colleges Schools Kept Administrators, Teachers

As part of its agreement to purchase more than 56 campuses from failed for-profit education giant Corinthian Colleges, Education Credit Management Corporation agreed to transition the Everest University and WyoTech schools to non-profit status, and generally avoid any of the shady business practices — inflated job placement rates, pushing students into high cost loans — that the former owner was accused of engaging in. Yet, a new report airing on PBS’ Frontline tonight suggests that while the company has worked to turn the schools around, some things — namely personnel — have not changed. 

In the segment, titled “A Subprime Education,” Frontline’s Martin Smith revisits the for-profit education industry and the accusations of misconduct lobbed against it six years after first uncovering allegations of fraud and predatory behavior by companies operating the schools in the documentary College Inc.

Tonight’s episode touches on the recent closure of ITT Technical Institute schools and the continued lawsuits against CCI, while also checking up on how debt buyer ECMC has worked to relaunch its WyoTech and Everest University schools.

The deal, which was brokered by the Department of Education, was reached as a way to provide some displaced students with a continued avenue to education, without burdening community colleges and other schools with a significant influx of students.

Under the agreement, ECMC, which created Zenith Education Group to operate the schools, transitioned the schools from for-profit to nonprofit status, created a program that eliminated some of the schools’ worst performing programs, and removed binding, mandatory arbitration from enrollment agreements.

So how has the revamp gone? Just fine, at least according to Zenith and ECMC executives.

“Well, the ultimate proof will be in the pudding,” CEO of Zenith Peter Taylor tells Frontline. “Our goal is to make sure that we can provide an affordable education of high quality, so that when a student comes out of one of our programs, they have no more than $4,000, $4,500 in debt. We think that’s affordable for a job that pays 20, 25 bucks an hour.”

While that’s the goal, it’s not quite the reality, Taylor admits.

Taylor and ECMC general counsel Dan Fisher tell Frontline that the company has taken a self-commissioned report on the failings of CCI and tried to do the opposite. Part of that involved cleaning house with personnel.

Taylor estimates that 60% of former employees are no longer working for the schools, including senior management and the marketing team.

Still, as Smith points out, that leaves a lot of CCI holdovers in place. That includes one-third of the compliance department, the people responsible for making sure the school follows the rules.

In addition to the compliance folks, Zenith has retained a significant portion of school administrators and teachers.

While these people may not have been running the entire show for CCI, some lawsuits have alleged that administrators and teachers took part in the company’s misconduct, such as caving to pressure to give passing grades to poor-performing students so that they could continue with their expensive course work.

Of course, not all of the administrators and teachers still employed by the colleges were involved. Many told Consumerist last year that they dedicated their time at the campuses to helping students.

“Well, the key thing is that schools that Zenith runs have to serve students well,” John King, Jr., secretary of Education, tells Smith. “There’s a monitor in place to help ensure that that occurs, and we’re going to do all we can to make sure that they’re serving students well.”

The real test of ECMC and Zenith’s work with the schools, however, will come in a few years, when they are required to answer to newly enacted gainful employment rules.

“It’ll take years for the final judgment to come in,” Barmak Nassirian, director of Federal Relations and Policy Analysis at American Association of State Colleges and Universities, tells Frontline.

Under the gainful employment rules, schools have three years to prove that they place students in jobs which pay enough for them to afford their student loans. If this can’t be done, the schools could lose their federal funding.

Essentially, Nassirian says that the process means regulation after the fact.

“You wouldn’t do that with food. You wouldn’t do that with drug safety,” he said. “The assumption is that the burden always ought to be on the provider to put enough evidence on the table that what they’re selling to the public, what they’re financing with public dollars, is wholesome and— and— and at the very least not damaging.”

You can see the full Frontline report on for-profit education when “A Subprime Education” airs tonight, nationwide on PBS.