2009: US Secretary of Education Arne Duncan leads the White House initiative to close predatory for-profit schools that specifically market to students eligible to take on federally backed student loans.
2014: Final Rules for the Gainful Employment Guidelines are published by the USDE. Lawsuits that challenge the Guidelines follow and are defeated.
April 2015: Corinthian Colleges is indicted by the Federal Government for falsifying workforce placement outcomes. Corinthian closes 80+ campuses within 30 days. 350,000 students are abandoned. Anticipating the Guidelines job placement requirement, Corinthian created false graduation employment data.
July 1 2015: The effective date for implementation of the Guidelines arrives. All for-profit private postsecondary schools will be evaluated in terms of meeting Guideline standards. All predatory for-profit schools have been required to report the same data for six years, however, they have never been held to the standards with sanctions in play.
August 2015: The White House announces a $3.6 billion pool will be set aside to help all 350,000 Corinthian students pay off their loans; approximately $10,000 per student.
Winter 2015: The first announcements are made identifying for-profit private postsecondary schools that are not in compliance with Guidelines. On Dec 23 Le Cordon Bleu announces it will close all 16 culinary schools, including two in California. The corporation cites federal guidelines as the cause. EDMC settles with 39 state Attorney’s General for more than $100 million while admitting fraudulent practices. Failures still to come will focus on loan default ratios, low graduation rates, and high percentages of graduates who fail to find work in their field. As a result these schools must publish these findings on their websites for the benefit of current and prospective students.
Summer 2016: The first wave of schools that have failed to meet Gainful Employment guidelines are announced. The “failure” schools have 45 days to “correct” the findings of data they submitted. The second year begins of for-profit private postsecondary schools reporting under the Guidelines.
Fall 2016: The first schools that fail to meet Gainful Employment Guidelines are officially announced. Frist stage sanctions are exercised. Students begin attempting to transfer out of the for-profit private postsecondary schools. They realize their credits will not transfer to other schools with similar programs.
Fall 2016: Enrollment in sanctioned schools drops off by 80%. The first set of for-profit private postsecondary schools begins cutting back operations.
Summer 2017: The second wave of schools that have failed to meet Gainful Employment guidelines are announced. The “failure” schools have 45 days to “correct” the findings of data they submitted. The third year begins of for-profit private postsecondary schools reporting under the Guidelines.
Winter 2016/2017: The second set of announcements is made identifying for-profit private post secondary schools not in compliance with the Guidelines. Schools that have failed their second consecutive year must post on their websites enrollment warnings for current and prospective students. Calls for legislation are made across the nation to address the loans and workforce predicaments for effected students.
Spring 2017: Students begin to drop out of failing schools. New enrollments go to zero. Schools begin closing overnight in droves. Crisis mode in chambers of elected officials.
30% (~2,000) of all private postsecondary schools in the US are in California. The BPPE has oversight authority of these schools. The big name corporations such as Corinthian, ITT, Devry, EDMC and Phoenix account for no more than 10% of the for-profit private postsecondary schools at risk in California. The greater danger is the small for-profit private postsecondary schools owned by individuals and single shareholders. These small operations (as many as 1200 in California) have far fewer financial resources than the large corporations and as a result will shut down immediately under the slightest financial pressure. The USDE expects 1,400 for-profit private postsecondary schools will close impacting as many as 140,000 students. Half to a third will be in California. This will overwhelm and exhaust the $25MM Student Tuition Recovery Fund. We believe the riskiest for-profit private postsecondary schools can be identified in advance. The prudent and just action is to close these predatory operations before further damage is done to individuals, institutions and the state.