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Corrections to GAO Report, Corinthian College Inc.

|Includes: Corinthian Colleges, Inc. (COCO)
Last August, the federal Government Accountability Office (NYSE:GAO) issued a report on the student recruitment practices of private sector career colleges.  The report cast the entire sector in a bad light.  The GAO testified about the report findings before the U.S. Senate Higher Education Labor and Pensions (HELP) Committee.  During the hearing, the GAO showed videotapes of career college admissions and student finance employees acting in a fraudulent, deceptive or misleading manner.
 
Of the 15 incidents in the GAO report, two involved CCi schools in which employees allegedly made erroneous or improper statements to undercover investigators.  After the report was published, CCi requested copies of the video tapes so that they could conduct our own internal review.  Although the GAO denied the request for the tapes at that time, CCi conducted an investigation and found no evidence that the company's representatives intentionally misled the GAO investigators. 
 
On November 30th, the GAO issued an amended report which materially changed the findings in the initial report.  In addition, the GAO finally made available the audiotapes of the secret shops on the two alleged schools (the video was not provided).  CCi has now listened to audio tapes of the undercover visits, and, simply put, the GAO’s allegations are not supported by the facts.   Further, the GAO report neglected to cite the positive exchanges that occurred between the employees and the undercover investigators.
 
In response to this, a detailed letter by Corinthian is being sent to the Senate HELP Committee requesting that the GAO’s inaccurate report be corrected for the Committee record.
 
Although disappointed with the way in which the GAO investigation was handled, it demonstrates the importance of continuing to be vigilant about in admissions and student finance processes and training.  Corinthians extensive training and monitoring programs help enable their admissions and financial aid personnel to treat prospective students honestly and fairly.  All of the admissions representatives must undergo a standardized, four-day training program before talking with prospective students. Furthermore, the company has its own undercover “mystery shopping” program that includes quarterly visits to all of our campuses, and follow-up visits if needed. 
 
Corinthian College Inc. will remain committed to the educational and career success of our prospective students, the current students, and the thousands of graduates. Also, to continue and “Walk the Talk” of integrity while making a positive difference in the lives of students.



Disclosure: I am long COCO.