In recent years, the problems of the for-profit college operator Education Corporation of America have been mounting
. It has stopped paying on time for its debts. And it fights the eviction from multiple locations, while creditors pursue judgments against the company.
This week, ECA told a federal judge that it could not complete a lecture – a process whereby students complete their degrees or otherwise transfer credits. – two dozen campuses to be closed, unless an unusual restructuring plan is approved. In a lawsuit denouncing education minister Betsy DeVos and her department as defendants, the company indicated that the government could receive numerous loan forgiveness claims from students who would have entered the campus without the plan.
Higher institutions entering insolvency are excluded from receipt of Title IV State aid, including grants and loans. The company has filed an action to ensure that it can continue to access federal aid during bankruptcy proceedings. His financial situation was so bad that it could not cover salaries or other costs without these funds.
"It seems ECA is on the cusp of death," said Matthew Bruckner, a professor who studies higher bills and bankruptcies at Howard University Law School. "They basically say," Without this bankruptcy administration we have no money; we can not teach. The company operates several for-profit chains with locations across the country, including Virginia College and Brightwood College. In the lawsuit, filed in a federal district court in Alabama, ECA says it enrolls around 20,000 students ̵
It announced plans to expire about 26 percent of its total area by December 26, 2006. The company said it was taking this step because of declining participation in the program
When a college plans to close a campus, it needs to be formulated A so-called "teach-out" process that allows students who are still enrolled to either graduate or their own The lawsuit argues that ECA would be without the existing restructuring ngsplan and continued access to Title IV can not fulfill these obligations.
"Without the discharge requested here, the unconditional actions of ECA creditors will almost certainly lead to a disorderly and chaotic process that will irreparably harm students' interests and minimize reimbursement for all creditors," the complaint said.
If the restructuring plan is approved, ECA said in the lawsuit, a creditor, Monroe Lenders, the ECA has responded to a request for further comments. Englisch: emagazine.credit-suisse.com/app/art … = 263 & lang = en the complaint does not respond
A spokeswoman for the education department said the agency could not comment on an active litigation  A sudden closure of these campuses would be unwelcome to students. It would also create serious costs to the federal government of school-leavers' claims – a process whereby borrowers can apply for credit default if their college suddenly closes during graduation.
But many ECA programs also have a questionable track record of academic outcomes that are not supported by the teaching process, said Antoinette Flores, Deputy Director of Post-Secondary Education at the Center for American Progress.
"On the one hand, it's terrible that the campuses are closed," she said. "On the other hand, it would mean that Title IV would continue to flow to institutions of questionable academic quality, and I do not think there is any benefit for students here."
The Accreditation Council for Continuing Education rejected a request in May of Virginia College to obtain an accreditation from the Accreditation Body, citing in part low graduation and job placement rates. The chain had been accredited by ACCET, partly because the status of its own accreditor, the Accreditation Council for Independent Colleges and Schools, was called into question.
The Obama administration attempted to abolish ACICS as an accreditor due to negligence. But after the organization got a second chance thanks to a court ruling, a senior Ministry of Education official recommended last month to extend its federal recognition by 12 months.
ACICS did not respond to a request for comment on the ECA lawsuit. The profit-driven chains operated by the ECA account for about half of the other institutions accredited by the organization.