Large for-profit college chain collapses, leaving students scrambling

A large for-profit college chain closed on Wednesday, leaving about 20,000 students scrambling to determine their next steps.

Education Corporation of America, the parent company of schools like Virginia College and Brightwood Career Institute, closed after months of financial turmoil largely due to declining enrollment.

Prior to its collapse, the company, which offered career-focused programs in fields such as cosmetology and the culinary arts, announced plans to close dozens of campuses and continued unsuccessfully the Department of Education to access federal financial assistance dollars during a receivership – a bankruptcy-like situation where an external entity manages a company’s finances.

This week again, Virginia College, one of the main branches of ECA, had his accreditation, a seal of approval required for a school to access federal financial aid dollars, suspended. The school was accredited by the Accreditation Council of Independent Colleges and Schools, a controversial gatekeeper who oversaw other for-profit colleges accused of misleading students.

“You can’t say their closure is caused by their own wrongdoing,” Toby Merrill, director of the Harvard Law School’s predatory student loan project, said of the ECA.

Several of ECA’s programs had fmanaged to meet a standard, known as paid employment, developed during the Obama administration indicating that they were preparing students with jobs that would pay them enough to pay off their student loans. “Their programs have proven to be of little value,” Merrill said.

The closure of ECA is the latest in a series of collapses of large for-profit university chains. In 2015, Corinthian Colleges filed for bankruptcy as the company claimed to have attracted students with inflated placement and graduation rates. In 2016, ITT’s technical institutes closed under similar circumstances.

Merrill, who works with student loan borrowers who say they’ve been scammed by their for-profit colleges, said he heard evidence of equally disturbing behavior from the ECA, including targeting communities of color and misleading students about the amount of in-person instruction. they would receive in their programs.

The closure of the ECA also comes as the regulatory environment surrounding for-profit colleges is changing. After the collapse of Corinthian and ITT, the Obama administration, under pressure from activists, crafted a rule so that borrowers would be safe when they were misled by their schools. In recent months, the Trump administration has worked to rewrite that rule in addition to an Obama-era rulebook aimed at cracking down on underperforming for-profit college programs.

“The harm that these schools cause to people, whether they collapse in the end or not, is enormous,” Merrill said. “By not addressing this problem, we are leaving a generation to rot with unpayable debt and a ruined financial future for reasons that are not their fault.”

The closure left the students scrambling

In the case of ECA, tens of thousands of students are now scrambling just weeks before what would be the end of the semester, as the company has been aware of its financial and accreditation issues for several months.

“I’d like to know what this company has done to try and minimize the damage to students when the handwriting was pretty clearly on the wall,” said Ben Miller, senior director of post-secondary education at the Center for American Progress. , a leftist thinker. Tank.

It remains unclear. In a letter addressed to the Director General of ECA, ACICS demanded Virginia College is submitting evidence of successful completion of programs for students who were expected to graduate by the end of this month and signed transfer agreements stating that enrolled students can complete their programs elsewhere.

Diane Worthington, spokesperson for the ECA, wrote in an emailed statement that students will be able to complete the current term, which ends on Friday. She added that the school plans to work with students to access their transcripts so they can complete their studies elsewhere.

“We are proud of our thousands of graduates who have entered the workforce with skills acquired in our schools, as well as our teachers and staff who have shown unwavering support to our students,” she said. wrote in the email, adding that further restrictions on access to federal financial aid was one of the factors that contributed to the school’s closure.

Education Department spokeswoman Liz Hill framed the ECA shutdown differently, calling the company’s sudden shutdown “very disappointing” in an emailed statement. The department was in daily contact with ECA and other potential partners to ensure that as many students as possible could complete their studies, she wrote.

“Instead of taking the next few months to shut down in an orderly fashion, ECA took the easy way out and left 19,000 students scrambling to find a way to complete the education program they started,” Hill wrote. in the email.

She added that the agency is ready to help students move to other institutions or receive a school exit closed, a provision that allows borrowers who attend college that closes to have their federal student loans wiped out. (Students can request a closed school discharge here).

Students who attended ECA schools when they close are entitled to have their loans canceled until they complete a comparable program at another school.

A student’s choice to write off their loans or continue their education depends on their circumstances, Miller said. “If you were a few weeks away from graduation, it might be worth finding a place to finish, especially if you’ve graduated from a program that is performing decent,” he said.

Still, students keen to transfer and complete their programs elsewhere should approach the decision with caution, according to Merrill. After the two Corinthian and ITT collapsed, other schools with poor results rushed to attract former students of companies into the transfer.

Therefore, while it is certainly a difficult time, “I suggest that students take a step back and consider their options before deciding what to do,” she said.

For former ECA students who are just starting out, especially those in a poorly performing program, “I would see this as an opportunity to get out of loans that you probably wouldn’t be able to repay,” Miller said.

Have you been affected by the closure of Virginia Colleges or any of the other ECA schools? We would love to hear from you. Email: [email protected].

About Alma Ackerman

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