Heald College students at the Honolulu campus were anxious Friday to find out any information about the future of the school — and their pricey degrees — after one of the country’s largest for-profit college operators abruptly threatened to shut down.
Corinthian Colleges Inc., the embattled corporate owner of Heald, Everest and WyoTech career colleges, warned Thursday that it could go under after federal regulators cut off its access to student loans, accusing the company of altering students’ grades and falsifying its graduates’ job placement claims.
On Friday, Illinois Sen. Dick Durbin said Corinthian has been targeted by 20 state investigations and called on the school to disclose information to its students and stop taking new enrollees.
The schools have more than 70,000 students nationwide.
"I do believe my degree might be in jeopardy," said Reiner Ancheta, a 23-year-old Heald student from Aiea. Ancheta is studying to be a dental assistant, and his tuition is about $5,000 per quarter before financial aid. "I’m just scared at the fact that if Corinthian Colleges goes out of business, Heald will, too, and I might have to start over. This is just the beginning for me."
Ancheta chose Heald because he can fast-track his degree and transfer to the University of Hawaii, where he plans to get a degree in dental hygiene and later dentistry.
The school hasn’t told students anything about its parent company’s financial troubles, though students say instructors in recent weeks have been showing "agitation and uneasiness" after attending a number of staff meetings.
"I kind of sensed something," Ancheta said. "It’s just a bummer that could or might happen. It’ll probably delay not just me, but a lot of students. It’ll really be a waste for the students who invested a lot for their education."
Corinthian Colleges, a for-profit education company based in California, relies heavily on student aid dollars to stay in business. It gets $1.4 billion a year in federal student loans and grants, according to a Department of Education statement Thursday. But the department said it put a 21-day freeze on that revenue stream last week "after the company failed to address concerns about its practices."
That delay will cause a cash-flow crisis the company might not survive, Corinthian reported in a Securities and Exchange Commission filing Thursday.
"Officials of Corinthian Colleges and the Department of Education engaged in a series of discussions throughout the day, and Corinthian believes these talks have been constructive," Kent Jenkins Jr., Corinthian Colleges vice president of public affairs communications, said in a statement Friday. "We are hopeful that the department and Corinthian can achieve an agreement that protects the interests of Corinthian’s students and employees and U.S. taxpayers."
Corinthian Colleges’ share price rose 5 cents to 33 cents Friday, after falling 57 cents Thursday to close at 28 cents. Thursday was the 52-week low for the share price, while the 52-week high was $2.75 set Aug. 26.
Mike Van Lear, president at Heald’s Honolulu campus on Kapiolani Boulevard, is on vacation through the end of June and couldn’t be reached for comment.
Students are worried about their future ability to repay the costly debt they already owe if it turns out they won’t be able to earn their degrees.
Alisandra Vaomu, a 43-year-old mother of three, waited until her children graduated to start her own career in business administration, a $10,000 degree program she has been working toward at Heald College for almost two years.
"I want my degree. I want to be able to graduate," she said. "I’m really concerned because I don’t want to be paying for school and halfway through they tell us they won’t be able to accommodate us."
Vaomu said she was confused after a financial aid adviser recently informed her that her federal grant was running out.
"We’re going to have to pay all that money back. If we don’t finish, we’re still liable for our student loans," she fretted. "I would hope if they do shut down, they’d be able to find another school to help us finish. I would hope they would tell us something soon."
There is a financial safety net for students whose schools close, according to The Oakland Tribune. The government forgives the federal student debt — including parent loans — of those enrolled in a school when it closes or who withdrew shortly before.
But students won’t be able to recover the time they spent working toward a degree that suddenly vanished, and in most cases their course credits won’t transfer to community colleges or public universities.
Renee Castle, 36, already graduated with a pharmacy technician degree from Heald, but returned this year to earn a second degree in medical assisting. To date she owes more than $20,000 for her educational costs at Heald.
"I did get an inkling something might be up," she said, after not getting an answer from Heald after two months about a federal work-study job that can help her defray educational expenses.
The school has recently been asking students who should have educational costs covered by financial aid to suddenly pay out of pocket, she said.
"I won’t be surprised (if it closes)," Castle added.
Honolulu Business College opened in 1917 and continued in 1934 with the establishment of Cannon’s School of Business. The campus joined the Heald College group in 1993, according to its website, and offers degrees in the health care, business, legal and technology fields.
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Bloomberg News and The Oakland Tribune contributed to this report.
