Corinthian Colleges (COCO) is closing all of its schools after it was accused of falsifying its finances and job placement rates.
The company reached an agreement with the US Department of Education last July to wind down or sell its operations after the DOE placed a hold on its access to federal student loan funds. The DOE announced plans to fine Corinthian Colleges $30 million.
Yahoo Finance’s Aaron Task notes that the for-profit college business has been struggling for a while.
“A lot of states attorneys general are going after these companies for allegedly false advertising and improper marketing," he says. "So it's a very difficult business to be in right now.”
The for-profit college sector has also faced pushback from the Obama administration, which proposed limits on federal aid allotted to for-profit colleges.
While students at for-profit colleges constituted 12% of the total college population, they accounted for almost half of student loan defaults in 2013, according to a report from The Institute for College Access & Success.
“It's almost hard to keep track of all the scandals and problems,” says Yahoo Finance Editor-in-Chief Andy Serwer. “Remember Corinthian COCO? Remember that ticker was a very, very hot stock in 2004…it's now one penny.”
Task adds that it was once seen as a fabulous growth stock.
"This was going to revolutionize the education industry," he says. "People were saying 'Privatize everything, everything's got to be a for-profit busines.'"
Other for-profit colleges are struggling as well. Apollo Education Group (APOL), parent company of The University of Phoenix, announced losses for the past quarter as both its revenues and enrollment sank.
Serwer notes that the end is near for many for-profit colleges.
“The government built this up and the government is taking it down," he says. "I think that this business just got way too big. There is a place for for-profit colleges, but not at the expense of all these students."
