One of the nation's largest non-profit colleges is facing a Federal Trade Commission investigation for allegedly deceptive marketing practices.
Corinthian Colleges must turn over documents related to marketing, tuition, billing, accreditation and military recruitment practices dating back as far as 2011, according to Apollo Education Group, which on Wednesday said it would cooperate fully with the FTC.
The probe comes amid a federal government crackdown on for-profit colleges, which have been criticized for leaving students with loads of debt and shaky job prospects. Regulators have repeatedly claimed that some schools prey on low-income students and veterans, encouraging them to take out expensive loans, and then use abusive tactics to collect repayment.
New federal rules were implemented on July 1 to hold these schools responsible for students return on investment of their degree programs.
Both Corinthian and ITT Educational Services have been sued by the Consumer Financial Protection Bureau over alleged predatory student lending. The University of Phoenix has not been sued by the CFPB.
The University of Phoenix is struggling with falling enrollment. It lost about half of its students in the past five years and has fired 900 employees since September. The college has approximately 206,000 students and expects enrollment to drop to approximately 150,000 next year. It has closed more than 100 campuses in recent years.
Apollo's stock is down more than 60% this year. Officials declined official comment about the FTC investigation.
Corinthian was fined $30 million in April for for overstating job placement rates for graduates. The company has since shut down its campuses.
The Department of Education intervened in the companys operations in 2014, cutting off Corinthians access to federal student loans without which it could not survive. The unprecedented move followed allegations that Corinthian falsified graduation statistics, inflated job numbers and abused the student lending process. The school then began winding down operations, affecting about 74,000 students.
In February, the government struck a deal with ECMC Group, allowing the student debt guarantor to acquire some of Corinthian's campuses. ECMC agreed to wipe out $480 million in debt to avoid any liability for Corinthian's alleged illegal activity. Collections & Credit Risk first reported about a possible deal in November 2014.
ITT, based in Indiana, was charged with fraud by the Securities and Exchange Commission in May. SEC officials said the companys chief executives misled investors and auditors with "outright misstatements" and "half-truths" about its student loan program.
ITT now must provide cash flow projections every two weeks, along with other information about financial transactions, planned school closures and expected new program offerings. The company also must provide the Education Department with a monthly roster of its 51,000 students, detailing their anticipated graduation date, enrollment status and individual contact information.
ITT already was operating under restrictive conditions regarding its access to federal money. The Education Department imposed heightened cash monitoring last year after the company failed to file annual financial and compliance audits on time. The company said Friday it expects its institutions to be subjected to [heightened cash monitoring] until at least November 2019.
Last year, the Consumer Financial Protection Bureau sued ITT and accused the company of exploiting its students by pushing them into high-cost private student loans that likely would end in default.