* Department of Education raises financial oversight
* Company has to wait longer to access student loan funds
* Says cash not enough unless alternative financing found
* Shares fall as much as 67 pct to life-low
(Adds Department of Education statement; updates shares)
By Sagarika Jaisinghani
June 19 For-profit education provider Corinthian
Colleges Inc said Its ability to continue as a going
concern was in jeopardy after the U.S. Department of Education
extended the waiting period to draw down federal student aid
Corinthian shares fell as much as 67 percent to a life-low
of 28 cents.
The college operator now has to wait for 21 days before
accessing funds related to the Title IV federal student loan
program, up from 24-72 hours earlier, the company said in a
regulatory filing. (1.usa.gov/1qvpC6z)
Corinthian's colleges have more than 72,000 students, who
receive about $1.4 billion in annual federal financial aid,
according to the Department of Education.
The department said it had stepped up oversight of
Corinthian as it had "failed to address concerns about its
practices, including falsifying job placement data used in
marketing claims to prospective students and allegations of
altered grades and attendance."
Increased regulation has added to the woes of the for-profit
education industry, which has struggled to attract students
since a 2010 government crackdown revealed high student debt
loads, low graduation rates and poor employability of graduates.
Student enrolments have slipped for the past three years at
most for-profit colleges, including those operated by Apollo
Education Group, Strayer Education Inc and
Career Education Corp.
INFLATED PLACEMENT RATES
The Department of Education first asked Corinthian in
January for information related to inconsistencies in job
placement claims for graduates, but the company did not turn
over the documents, the department said on Thursday.
Since then, the department said, it had sent Corinthian five
letters requesting data and other documentation.
The department notified Corinthian on June 12 about some
information it was yet to provide and placed all its schools
under the "Heightened Cash Monitoring 1" (HCM1) payment method.
HCM1 requires a company to provide the department with
documentation of students' eligibility for the Title IV program
funds along with disbursing funds to eligible students.
Corinthian said it was cooperating with the department and
has sought relief from the 21-day wait. The company's cash flows
will not be sufficient to meet its obligations if it can't find
The college operator has been exploring strategic options
and seeking alternative sources of capital since it breached
some debt covenants earlier this year.
Santa Ana, California-based Corinthian's shares were down 63
percent at 31 cents in afternoon trading on the Nasdaq.
More than 20 million of the company's 87.6 million shares
outstanding had changed hands by 12:48 p.m. ET.
The company now has a market capitalization of about $25
million, a far cry from about $3 billion in 2004.
Shares of other for-profit education companies also fell.
(Reporting by Sagarika Jaisinghani in Bangalore; Editing by