Nonprofit organization ECMC Group Inc., known for its work in the student loan industry, is acquiring 56 Everest and WyoTech campuses from Corinthian Colleges Inc. The approximately $24 million transaction, announced Thursday, will create the largest nonprofit career-college system in the U.S.
ECMC Group, an affilicate of Zenith Education Group, will buy campuses in 17 states along with online programs. The acquisition is expected to close in January, subject to regulatory approvals.
Corinthian Colleges, based in Santa Ana, Calif., is the troubled for-profit higher-education company that is closing operations under a deal with the U.S. Education Department. The Consumer Financial Protection Bureau previously requested documents related to the sale and Corinthian reported in a regulatory filling in September that the CFPB accused the company of violating the Fair Debt Collection Practices Act and the Dodd-Frank Act.
ECMC said it plans to cut tuition prices by 20% at most of the programs. It also promises to improve academic counseling and remedial education at all the colleges and provide millions in grant aid so that students dont have to take out private loans to pay tuition.
ECMC also will acquire 12 schools that are being "taught out" and closed and will continue the teach-out process until complete. In total, the schools being purchased represent all of Corinthian's U.S.-based Everest and WyoTech campuses located outside of California, serving more than 39,000 students.
Corinthian has been under investigation by several federal agencies. In June, the Education Department withheld the company's access to federal aid funds, causing liquidity problems. Corinthian then began liquidating assets by working to sell or close its 107 campuses.
In July, Corinthian agreed to warn prospective students online of its plans to sell most of its campuses. That move was in response to legal action by California Attorney General Kamala D. Harris.
ECMC Group came under fire earlier this year in a front-page article in The New York Times that called the company's collection work "ruthless" in actions against student debtors.
The article was about Educational Credit Management Corporation, the ECMC Group arm that guarantees approximately $30 billion in federal student loans and serves as a contractor for the federal government and other guarantee agencies to collect student loan debts.
Corinthian also owns Heald College, which has 12 campuses in three Western states; 13 Everest and WyoTech campuses in California; and 14 Everest campuses in Ontario, Canada. Collectively, these 39 schools serve an estimated 20,000 students. Corinthian expects to continue to operate these schools until it finds suitable buyers, according to officials.
"Everest and WyoTech students will benefit greatly from ECMC Group's commitment to students and its goal of making a positive difference in career education," said Jack Massimino, chairman and CEO of Corinthian Colleges. "ECMC will focus significant resources on student programs and services and enhance the future prospects of Everest and WyoTech."