* 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 (Reuters) - 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 funds.
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.
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 alternative financing.
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 Joyjeet Das)