Last week, after years of being on the financial precipice and facing accusations of improper recruiting practices by authorities in several states, Corinthian Colleges, a for-profit education company with 74,000 students in more than 100 locations around the country, began to wind down its operations. In an agreement with the federal Department of Education, Corinthian said it would halt admissions and try to sell 85 of its campuses.
At another 12 Corinthian campuses, students can continue their studies until they graduate. Certain students who choose to stop attending classes will receive refunds, the company said.
Even as the company’s fortunes faded in recent years, Corinthian’s five top executives piled up real money: Over the last three years, they’ve shared $12.5 million in salaries and cash bonuses.
But taxpayers and Corinthian students — a vast majority of whom have borrowed to finance their educations — will be the biggest losers. When Corinthian eventually vanishes, its graduates will be left holding degrees from a defunct institution. This will make it even tougher for them to get jobs, resulting in higher default rates on their federal student loans.
Related: NYU’s student debt stories.