In another blow to the failing Corinthian Colleges, a California state agency on Monday said it had withdrawn its approval of the for-profit company — which means it will no longer pay GI benefits for veterans to attend any of Corinthian's 23 institutions.
As of June, about 1,400 veterans or their dependents received military benefits to go to a Corinthian-owned college in California.
California's Department of Veterans Affairs, CalVet, pulled Corinthian's approval after the company failed to meet a 60-day deadline to demonstrate its financial stability or sale of the schools, which include WyoTech, Heald and Everest, the department said in a news release.
"CalVet takes very seriously our duty to ensure our California veterans receive the education and training they are paying for with their earned GI Bill benefits," said Keith Boylan, Deputy Secretary of Veterans Services. "After (Corinthian Colleges) failed to comply ... our action was required by law."
CalVet put Corinthian on suspension June 24, days after the career-college giant told investors that federal financial aid sanctions could cause a cash-flow crisis great enough to put it out of business.
Corinthian and other large, for-profit institutions receive most of their revenue from federal student loans and tuition grants, and military benefits.
During a four-year period ending in June 2013, CalVet alone paid $56.9 million to Everest, Heald and WyoTech campuses, according to the department's records.
California's action will further weaken the company's hobbled financial state and could undermine its attempt to sell 85 of its 97 U.S. campuses before it goes out of business — part of a deal reached in July with the U.S. Department of Education.
A federal disclosure Corinthian posted Monday revealed the publicly traded company's intensifying need for cash, its $19 million sale of private student loan notes, and some of its growing regulatory and legal woes — including accusations from the Consumer Financial Protection Bureau that it had violated the Dodd-Frank Act and, among other concerns, illegally collected debts from students while they were attending school.
Corinthian noted in the filing that "further restrictions on funding or operations by accrediting agencies, state agencies, or other funding sources would exacerbate the Company's existing liquidity constraints."
A spokesman for Corinthian couldn't be immediately reached for comment Monday.
Boylan said the department's decision "removes uncertainty for veteran students and allows them to move forward in finding alternatives for continuing their educational path."