NEW YORK — The for-profit college industry's implosion has intensified, with two companies announcing mass campus closings days after a third filed for bankruptcy.
In a stunning fall from grace, the three companies — Career Education, Education Management and Corinthian Colleges, which once had 300,000 students — have lost almost $8 billion in market value since their peaks over the last six years.
Career Education will shut or sell all of its career colleges to focus on its two universities, it said Wednesday. Education Management will close 15 of its Art Institute campuses.
No schools in Nebraska or Iowa are affected, although Education Management does have a Brown-Mackie career college in Bettendorf, Iowa.
Corinthian Colleges declared bankruptcy this week — the biggest college collapse in U.S. history — amid allegations that it falsified grades and job-placement data to attract students.
A federal crackdown is reining in for-profit colleges, which authorities have accused of preying on low-income students and saddling them with debt.
The companies have denied wrong doing and say they are providing education to many lower-income students shut out of traditional colleges.
"The collapse of Corinthian Colleges was the canary in the coal mine for the for-profit college industry," said Sen. Richard Durbin, D-Illinois. He called the upheaval "a long-overdue reckoning for an industry that profits off of students while sticking them with a worthless degree and insurmountable debt."
Hard hit are the so-called career schools, which charge tens of thousands of dollars for certificates and associate degrees in areas such as criminal justice, dental assisting, art and cooking, in which jobs and wages are limited.
Under federal rules due to take force this summer, to qualify for U.S. financial aid, schools will have to show they're preparing students for gainful employment and that graduates spend less than 8 percent of their income on loan payments. A for-profit college trade group is challenging the new rules in court.
Career Education and Education Management said they'd let current students finish their programs.