Boston, MA 06/23/2014 (wallstreetpr) – Corinthian Colleges Inc (NASDAQ:COCO), a for-profit professional education provider, is facing a bleak future. The company’s practice has been called to question and it is now in danger of shutting down, especially due to lack of enough money to run operations.
The company has been denied access to the federal funds, which it relies on for its operations and it now faces a cash-flow crisis. The management last week said the company cannot survive if no immediate fix to the financial crisis is found. There seems to be little hope for the company because it also reported that its efforts to borrow money have been unsuccessful as lenders declined its request.
Questionable practice
According to the U.S. Department of Education, the company failed to comply with the requirement to provide certain documents and other information as requested by the agency. The move by the agency to demand documents from the company stemmed from widespread allegations against the company. Some of the allegations hinged on alteration of student grades, attendance records and misleading ads about student placement data.
The company has also been investigated by a number of states in relation to suspiciously high rates of student-loan default. According to Kamala Harris, the attorney general of California, Corinthian Colleges Inc (NASDAQ:COCO) intentionally enrolled poor and vulnerable students and signed them up for expensive loans that they had little hopes to repay. As if that was not enough, Harris also said the college advertised programs that were none existence.
No money, shutdown looms
According to the Department of Education, Corinthian Colleges Inc (NASDAQ:COCO) will have to wait for at least 21 days after it submits the student enrollment data to gain access to the federal student funds. However, with the inevitable delay and without a reliable alternative to obtain funds, the company is sitting on the danger of shutting down.
The company also said that the Department of Education has been unwilling to compromise, which could give it a financial relief. The company has about 75,000 students enrolled nationwide.
