January 23, 2014 Jack D. Massimino, ChairmanJ'CEO UPS Tracking Corinthian Colleges, Inc. IZAST96-10195350376 6 Hutton Centre Drive, Suite 400 Santa Ana, CA 92707 Re: Pending Applications and Requests for Documentation and Information Dear Mr. lvlassiminoz This letter notifies Corinthian Colleges, Inc. (CCI) that the U.S. Department of Education (Department) has completed its review of CCI's pending applications (commonly called '"eApps") for the Department's approval of various new programs and locations to participate in programs authorized pursuant to Title IV of the Higher Education Act of I965, as amended, 20 U.S.C. 1070 at seq. (Title IV, HEA programs). The Department is sending under separate cover letters to each CCI institution notifying them of the particular actions the Department has taken with respect to those applications. This letter further provides a brief explanation for the Department's actions and informs CCI that, as of the date of this letter, all CCI institutions must request the Department's approval for establishing eligibility of any new locations and programs and wait for the Dcpartmenfs decision prior to disbursing any Title IV funds to students attending such new locations and programs. See 34 CPR. and 600.21. Finally, this letter requests certain documentation and information with respect to placement rate percentages, and grade and attendance record changes, at all CCI institutions. The Department has denied approval for certain new locations and new programs because CCI has admitted to falsifying placement rates andfor 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. Adherence to all Title IV, HEA statutory and regulatory requirements is mandatory for institutions that participate in the Title IV programs as the Department's tiduciaries, and the issuesjust referenced suggest systemic deficiencies in the operations of CCI as the parent corporation of all CCI institutions. See 34 C.F.R. 668.14 and 663.16. Because of these concerns, the Department will not approve CCl"s Title IV growth through the addition of any new locations or programs going forward until the Department ascertains whether CCI and its institutions possess the requisite administrative capability to ensure compliance with all Title IV program requirements. PROUD SPONSOR of the AMERICAN Federalstudent An OFFICE of the U.5. DEPARTMENT at EDUCATION 830 First Street NE, Washington DC 20202 Letter to Jack D. Massirnino -- Corinthian Colleges, Inc. Page 2 of5 The following is a brief discussion of each pending eApp: 1. OPE ID: 001499 Everest University Orlando, FL, Program Participation Agreement (PPA) expired -- The Department approves a new provisional PPA to merge as live additional locations ID: 001499 the following separate OPE ID 001534, 008146, 021218, 025998, and 030032: A. OPE ID: 001534 Everest University -- Tampa, FL. The Department also approves the closure of the Milwaukee, WI location. OPE ID: 008146 Everest University Pompano Beach, FL. OPE ID: 021218 Everest Institute -- Miami, FL. OPE ID: 025998 Everest University -- Largo, FL. OPE ID: 030032 Everest Institute -- Miami (Kendall), FL. The Department approves a new provisional PPA for institutions 2 through 6 below. . OPE ID: 004494 Everest College -- San Bernardino, CA, PPA expired -- 3/3 H2012. . OPE ID: 007091 Everest Institute -- Pittsburgh, PA, PPA expired -- 6<<'30x'2013. . OPE ID: 022375 Everest College -- Henderson, NV, PPA expired -- 9/'30f2013. . OPE ID: 007190 WyoTech -- Fremont, CA, PPA expired -- 6r'30f2013. . OPE ID: 023462 WyoTech -- Ormand Beach, FL, PPA expired -- 6f30i'2012. The Department approves the new program(s), as set forth in the separate approval letters to institutions 7 through 11 below, given that these programs were previously self-certified by the institutions and have already disbursed Title IV aid to students. OPE ID: 004503 Everest College -- Colorado Springs, CO, PPA expires -- 3f31a'2017. 8. OPE ID: 009828 Everest Institute -- Southfielcl, MI, PPA expires -- 9r'30f20 14. 9. OPE ID: 011 I09 Everest College -- Reseda, CA, PPA expires -- 12f31f2015. 10. OPE ID: 031954 Everest College -- Torrance, CA, PPA expires -- 3131112015. 1 1. OPE ID: 00450? Everest College -- Thornton, CO, PPA expires S. 12. OPE ID: 011510 Everest Institute -- Brighton, MA, provisional PPA expired -- 6r'30f2012. The Department approves a new provisional PPA. The Department denies the new program -- Medical Assistant CIP 51.0801. 13. OPE ID: 022613 Everest Institute -- San Antonio, TX, PPA expires -- 12f3l/2013. The Department approves a new provisional PPA. The Department denies the following new programs: (1) Business Accounting CIP 52.0302, (2) Business Office Administration CIP 52.0401, and (3) Business Sales and Customer Service CIP 52.0411. 14. OPE ID: 022950 Everest College -- Phoenix, AZ, provisional PPA expired -- 3f31:'2013. The Department approves a new provisional PPA. The Department denies the following new programs: (1) Intormation Technology Support Specialist CIP 11.1006, (2) 1 Note that the Department has continued each expired PPA on a tnonth-to-month basis in accordance with 34 C.F.R. Letter to Jack D. Massimino -- Corinthian Colleges, Inc. Page 3 oF5 Customer Experience Management CIP 52.0411, and (3) Medical Administrative Assistant CIP 51.0716. 15. OPE ID: 022985 Everest College -- Salt Lake City, UT, PPA expired -- 9f30i'20l2. The Department approves a new provisional PPA. The Department denies the following new programs: (1) Information Teclmology Support Specialist CIP 1 1.1006, and (2) Business Accounting CIP 52.0301. 16. OPE ID: 009267 1'-Zvercst College -- Newport News, VA, provisional PPA expired -- The Department will keep this institution on a month-to-month status. 17'. OPE ID: 010356 Everest Institute -- Cross Lanes, WV, provisional PPA expired -- 1281/2013. The Department will keep this institution on a month-to-month status. 18. OPE ID: 009175 WyoTech--Laramie, WY, PPA expires 9f30f201 5. The Department recently received this e-App and is still in the process of reviewing it. The Department continues to review the recently received recertification applications for institutions 19 through 30 below. 19. OPE ID: 008090 Everest College -- Alhambra, CA, PPA expires -- 3:'3 H2014. 20. OPE ID: 009029 Everest College -- Portland, OR, PPA expires -- 3/31f2014. 21. OPE ID: 011107 Everest College -- Anaheim, CA, PPA expires 313122014. 22. OPE ID: 011 I23 Everest College -- Gardena, CA, PPA expires -- 3E3 H2014. 23. OPE ID: 023001 Everest College -- Bremerton, WA, PPA expires -- 3J3 H2014. 24. OPE ID: 026062 Everest College -- Renton, WA, PPA expires 3/3 H2014. 25. OPE ID: 026175 Everest College -- Seattle, WA, PPA expires -- 3f31f20l4. 26. OPE ID: 030723 Everest College -- Ontario, CA, PPA expires -- 3:13 H2014. 27'. OPE ID: 012823 WyoTech -- Long Beach, CA, PPA expires -- 3J3 H2014. With respect to pending eApp #1 above, as will be noted in the provisional PPA for this institution, CCI's audited financial statements for the fiscal year ended June 30, 2012 showed that Everest University OPE ID: 001534 failed to meet the standards pursuant to of the I-IEA, 20 U.S.C. 1094(a)(24) and 34 C.F.R. which require a proprietary institution of higher education to derive not less than ten percent of its revenues from sources other than funds provided by Title IV of the HEA (known as the "90;'1 0 Requirement"). In addition, for the fiscal year ended June 30, 2013, CCI reported in its annual audited financial statements that Everest Institute, OPE ID: 030032 also failed the 90f10 Requirement. As a condition of the Department's approving the merger of these institutions as additional locations of Everest University, OPE ID: 001499, CCI must agree to complete and timely submit to the Department, within 45 days of the June 30, 2014 fiscal year end, a 90:' 10 calculation for Everest University, OPE ID: 001534 (and all its former additional locations) and Everest Institute, OPE ID: 030032 (and all its former additional locations). CCI must acknowledge that the Department's approval of the additional locations created as a result of the merger of these two OPE ID numbers under the surviving OPE ID number (001499) will be revoked if the Letter to Jack D. Massimino -- Corinthian Colleges, Inc. Page 4 of 5 Departments review of the financial statements for OPE IDs: 001534 and 030032 reveals two consecutive years in which the institutions failed the 90:' 10 Requirement. In addition, as referenced at the outset of this letter, the Department hereby requires CCI to produce within 30 calendar days of the date of this letter the following information regarding placement rates, and grade and attendance record changes. Please send these materials to the Following address: Mr. Charles L. Director Atlanta School Participation Division US. Department of Student Aid 61 Street, SW, Room 18140 Atlanta, GA 30303 1. Placement Rates On February 1, 2013, you wrote a letter to Charles Director of the Atlanta School Participation Division ofthe Department. (Enclosure 1). In that letter you stated: current enrollment package containing disclosures to prospective students who might be interested in attending our Medical Assisting Program in Santa Ana, CA is enclosed as Exhibit 1. As we are sure you are aware, disclosures and other program- and campus- specific information provided to prospective students depend on the program and campus the student is interested in attending. We are including with Exhibit 1 only one of the many hundreds of permutations that might be provided to prospective students across the country, but would be happy to provide any others you would like to review. in original.) A. Specifically, Enclosure 2 to this letter--a four page document entitled "School Performance Fact Sheet"--was included within Exhibit 1 to your February 1, 2013 letter. Please provide a copy of every such disclosure for every program for every CCI location (for all CCI institutions, Everest Colleges, Everest Institutes, Everest Universities, WyoTechs, Heald Colleges, and any other CCI institution that participates or participated in the Title IV programs) for the calendar years 2010, 201 1, and 2012. When CCI has compiled these disclosures for calendar year 2013, please provide the same information. B. Note that Enclosure 2 at page 2 states that for calendar year 201 1, the "Placement Rate of Graduates Employed in the Field" was 81%. Please provide the evidence upon which CCI relied to derive this placement rate and each of the other rates cited in each disclosure CCI provides in response to the preceding paragraph A. C. Please supply in electronic format in an Excel worksheet for every program, at every CCI location, a list of all students placed by name and Social Security number, the students' most recent telephone numbers and cell phone numbers, graduation dates and academic Letter to Jack D. Massimino -- Corinthian Colleges, Inc. Page 5 of5 programs, job titles, start dates, employers' names and contact information (including supervisors' and employers' telephone numbers). The Department understands that CCl's allow certain students to be omitted from the placement percentage calculation for various reasons, known as "waivers." Please include in this worksheet those students who were omitted from the placement percentage calculation due to any kind of a waiver, and provide those students' names, Social Security numbers, most recent telephone numbers (including cell phone numbers), graduation dates, academic programs attended, and the reasons for the waivers. Please see Enclosure 3 to this letter entitled "Placement Data," for the format to use for this information. 2. Grade and Attendance Record Changes Please extract and send all records of all grade and attendance record changes made in all CCI institutions' financial aid management systems from and after one 30, 201 1 through the date on which the data is extracted. The extract of the records must be displayed using the format in Enclosure 4 to this letter entitled "Data Audit Attendance Protection of Personally Identifiable Information (Pll): Because responses to the above two categories of documents will contain Pll, please note the following information. is any information about an individual that can be used to distinguish or trace an individual's identify (some examples are name, Social Security number, and date and place ofbirth). The loss of P11 can result in substantial harm, embarrassment, and inconvenience to individuals and may lead to identity theft or other fraudulent use of the information. To protect PII, please see Enclosure 5 to this letter entitled "Protection of Personally Identifiable Information" for instructions regarding how to submit to the Department required data/"documents that contain PII. Sincerely, 24%; Robin S. Minor Chief Compliance Officer Enclosures: Enclosure 1: February 1, 20l3 letter from Jack Massimino to Charles L. Enclosure 2: Exhibit 1 to above letter Enclosure 3: Excel Spreadsheet, "Placement Data" Enclosure 4: Excel Spreadsheet, "Data Audit Attendance Grades.xlsx."' Enclosure 5: Protection of Personally Identifiable Information |s