Everest University Online has laid off 105 employees at its Colorado Springs contact center, amid months of state and federal investigations into the business practices of the online school’s parent company, Corinthian Colleges Inc.
Despite ongoing legal inquiries, the Santa Ana, Calif.-based corporation blames the downsizing on slowing enrollment across the industry, according to Kent Jenkins, Corinthian’s vice president of public affairs communications.
“After several years of rapid expansion, the online education sector has entered a phase of consolidation and modest student enrollment growth,” the company said Feb. 4 in an email to staff. “This trend affects Everest online as well as other educational organizations. Unfortunately, this has required us to make changes in the composition of our work force.”
The layoffs at Everest’s center at 1575 Garden of the Gods Road were in the admissions and student finance divisions, according to Jenkins. The 105 employees were notified Feb. 4 of their terminations, which were effective immediately.
Earlier reports of the layoffs quoted a workforce reduction of 175, which was the result of some confusion. Jenkins said that 175 is the total number of terminated positions, of which only 105 had been filled at the time of the firings.
This round of terminations did not affect the operations of Everest College at 1815 Jet Wing Drive (formerly Blair College, with roots that date to 1897) in Colorado Springs or the school’s other campuses in Thornton and Aurora, Jenkins said.
“While we regret the impact this has on some of our employees, it is important to note that none of the Everest College campuses in Colorado is affected in any way,” according to the email. “The students and faculty at those campuses are not affected. It is also important to note that Corinthian Colleges remains committed to our Colorado Springs online center. In fact, we are currently increasing the number of employees in the academic services department, with the goal of creating an academic hub at the same location.”
The Colorado Springs contact center is the only such Everest University Online facility in the state. Layoffs were also experienced at similar facilities in Tampa, Fla., and Tempe, Ariz.
According to media reports, parent company Corinthian Colleges Inc. announced in November that its business practices were the subject of multiple investigations by both federal and state agencies.
The company was denied approval by the U.S. Department of Education to create new programs and establish new locations pending further investigation. Everest also faces potential action from the Consumer Financial Protection Bureau for issues related to its student loan programs.
In a Jan. 23 letter, the U.S. Department of Education told the company that:
“The Department has denied approval for certain new locations and new programs because CCI has admitted to falsifying placement rates and/or grade and attendance records at various institutions and because of ongoing state and federal investigations into serious allegations with respect to CCI’s improper administration of the Title IV programs.”
The company’s earnings report for the second quarter of fiscal year 2014 (released Feb. 5) in comparison with the same quarter of 2013, showed:
• Net revenue down nearly 9 percent, from $406.1 million to $369.9 million.
• More than 11 percent decrease in student population, from 87,250 to 77,584.
• New student enrollments were down more than 14 percent, from 23,074 to 19,760.
• Operating income was down to $14.1 million from $17.8 million.
• Continuing operations income was down to $4.6 million from $6.6 million.
In that quarter, the company had already charged $1.9 million in severance packages generated from workforce reductions.
On Jan. 24, the company was notified that the Iowa Attorney General’s office is leading an investigation including 13 states (Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon Tennessee, Washington and Pennsylvania) into Corinthian’s business practices, according to a report by the U.S. Securities and Exchange Commission.
Many of those 13 states have issued Civil Investigative Demands seeking documents and answers to inquiries related to the company’s student recruitment, organization, tuition, financial aid, enrollment qualifications, accreditation, job placement rates and many other areas.
“The Company is aware that several other companies in the for-profit education sector have received similar CIDs,” according to the document. “The Company intends to cooperate with the inquiry.”