Dear Commons Community,

The for-profit Education Corporation of America announced late Wednesday that it was closing its 70 colleges leaving almost 20,000 students with partially completed degrees and credits that many other schools will not accept. The shutdown was the largest failure of a for-profit chain since 2016, when ITT Technical Institutes went bankrupt, and came after the college’s accreditor — itself a troubled organization that the United States Education Department had accused of oversight failures — notified the company on Tuesday that it would no longer endorse its programs.  As reported by The Chronicle of Higher Education:

“When you look at the outcomes for the ECA schools, they’re challenging at best,” said Steve Gunderson, chief executive of Career Education Colleges and Universities, a trade group that lobbies for such institutions. Enrollment had been plunging at the company’s institutions, and “everyone knew they had financial problems,” he said.

Antoinette Flores, who researches higher-education policy for the Center for American Progress, explained that the U.S. Department of Education had placed financial restrictions on the colleges nearly a year ago because of ECA’s struggles. “The writing has been on the wall for a long time,” she said…

…The closure followed several months of uncertainty and financial distress. In September, the company announced that it planned to close about two dozen campuses by early 2020. At the same time, the Accrediting Council for Independent Colleges and Schools (Acics) sanctioned the company’s Virginia College chain of campuses. That sanction, a “show cause” order, often leads to the loss of accreditation and subsequent closure of an institution.

In October, the company sued the Education Department, seeking a judgment that it would remain eligible for federal student-aid dollars under a plan to restructure its finances. The suit said that the company could no longer pay its creditors and was facing several lawsuits and even eviction notices at some locations.

Last month, however, a judge dismissed the suit and appointed a receiver to manage the company’s debts. The final straw came on Tuesday when Acics suspended the accreditation of the Virginia College chain, in part because ECA could no longer pay its fees to the council.

Only at that point did the accreditor require the company to submit a plan for a teach-out, detailing how students still enrolled at the institutions could complete their programs at other colleges.

The Education Department, which had been “in daily conversations” with the company and other colleges to arrange teach-out partners, blasted the company for the closures. “Instead of taking the next few months to close in an orderly fashion, ECA took the easy way out and left its students scrambling to find a way to finish the education program they started,” said a prepared statement from the department.

“The Department is ready to help ECA students with either transferring their credits to new schools or applying for closed school discharges,” the statement said.”

This was not unexpected.  We hope that there will be a graceful end for the students affected by this closure especially with regard to discharging their financial aid debts.

Tony

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