Boston, MA 07/08/2014 (wallstreetpr) – Corinthian Colleges Inc (NASDAQ:COCO) will close most of its campuses in the U.S. and Canada under a deal with the U.S. Department of Education.
The troubled for-profit school operator recently suffered a blow when the education agency restricted its access to federal funding over alleged record manipulation and misleading advertisements. The move followed a failure by the company to comply with the request to supply some data relating to the alleged malpractice.
Corinthian (NASDAQ:COCO) enrolls about 72,000 students across the U.S., and it receives $1.4 billion annually in federal financial aid.
Following the agreement with the education agency, the company will begin informing students about the planned closure of campuses and subsequent sale of the same. As such, the company will stop enrollment at the schools earmarked for closure and allow the students to collect refunds where applicable.
The schools that will be affected are those under the brands names Everest, Heald and Wyotech.
The government agreed to release $35 million in federal financial aid to Corinthian Colleges Inc (NASDAQ:COCO) to begin the plans to shut and sell the schools. The company has been asked to hire an independent monitor to oversee its actions.
Refund To Students
Corinthian (NASDAQ:COCO) will allocate $30 million to meet student refunds. The refund allocation is expected to come from the proceeds generated from the sale of the campuses or from future federal financial aid.
As plans to close and sell the colleges progresses, the company has been asked to provide the data earlier sought by the education department for investigations.
Even amid widespread accusations, the company maintains it has complied with the regulatory requirements and that its practice does not violate the education rules such as misleading students about loans and manipulating records to qualify for funding.
Delisting From NASDAQ
Corinthian Colleges Inc (NASDAQ:COCO) has received a delisting notice from NASDAQ. The stock, which is down more than 90 percent in the past one year, has dropped to closing below $1 per share as the company’s woes escalate.