Elizabeth Warren launches investigation into sudden collapse of for-profit college chain

Warren and several other senators demanded the Department take immediate steps to aid and protect students, veterans, and taxpayers in the wake of the significant collapse.

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Sen. Elizabeth Warren (D-Mass.), House Oversight Committee Ranking Member Elijah Cummings (D-Md.), and Rep. Suzanne Bonamici (D-Ore.) have opened an investigation into the sudden collapse of the massive for-profit college chain Education Corporation of American (ECA), demanding information from ECA and the Accrediting Council for Independent Colleges and Schools (ACICS), the failed accreditor responsible for giving ECA its stamp of approval prior to the collapse. In a separate letter addressed to Education Secretary Betsy DeVos, Warren and several other senators demanded the Department take immediate steps to aid and protect students, veterans, and taxpayers in the wake of the significant collapse.

In a recent letter addressed to ECA President and CEO Stu Reed and his attorney, Warren, Cummings, and Bonamici wrote, “On Wednesday, December 5, 2018, ECA announced that it would immediately close more than 70 of its campuses across 21 states, including the campuses of Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College. ECA’s collapse immediately displaced approximately 18,000 students. In one instance, students enrolled at one of Brightwood’s Maryland campuses were given as little as two days’ notice of their school’s closure, and must now find another school to accept their class credit.”

They added, “Federal student loans are the primary means by which for-profit colleges sustain themselves. In 2016, Department of Education records show ECA took over $390 million in taxpayer-funded federal student aid and GI bill benefits.

“Several thousand veterans are among the students harmed by ECA’s collapse. According to Department of Veterans Affairs data, ECA’s closure will impact nearly 4,000 student veterans who had been using their GI Bill funds at ECA campuses.”

In a separate letter to ACICS President and CEO Michelle Edwards, Warren, Cummings, and Bonamici wrote, “We write to request information on due diligence measures the Accrediting Council for Independent Colleges and Schools (ACICS) took, or should have taken, to protect the approximately 18,000 students affected by the recent collapse of for-profit college conglomerate Education Corporation of America (ECA). We are partially concerned as to why ACICS granted accreditation to ECA schools despite reports of rampant financial instability that ultimately required the Department of Education to place ECA on ‘Heightened Cash Monitoring.’ We seek clarity regarding preventative measures ACICS could have taken by requiring or more aggressively pursuing ‘teach-out agreements’ that would have protected ECA students’ class credits and educational investments in the event of permanent school closure.”

In a third letter signed by Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Mazie Hirono (D-Hawaii), Richard Durbin (D-Ill.), Richard Blumenthal (D-Conn.), Dianne Feinstein (D-Calif.), Kamala Harris (D-Calif.) and Bernie Sanders (I-Vt.), the senators demanded that Education Secretary DeVos take immediate steps to aid and protect students, veterans, and taxpayers in the wake of this recent collapse. They wrote, “For nearly two months before ECA’s announcement that it was closing its doors, the Department knew that ECA was not only continuing to struggle financially, but was on the very brink of failure. Moreover, after a federal judge dismissed the lawsuit in November, the Department had information in its possession indicating that ECA was at high-risk of a ‘disorderly and chaotic’ collapse.”

Warren and her colleagues asked that ECA, ACICS, and the Department of Education respond to their letters by January 21, 2019.

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