December 27, 2018

Warren, Cummings, Bonamici, Colleagues Demand Answers about Collapse of For-Profit College Chain Education Corporation of America

ECA's Sudden Collapse Immediately Displaces Roughly 18,000 Students, Over 4,000 on GI Bill

Letter to ECA (PDF) | Letter to ACICS (PDF) | Letter to Secretary DeVos (PDF)

Washington, DC - United States Senator 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.  ECA provided no warnings to its students, and left 18,000 students in 20 states scrambling for answers and a way to continue their education.

On December 5, 2018, long-troubled ECA announced that it would immediately close about 70 of its campuses, including the campuses of Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College.  This closure immediately displaces thousands of students, many of whom, at ECA's direction, took out thousands of dollars in student loans to attend its doomed programs.  According to Veterans Affairs Department data, this closure will impact nearly 4,000 student veterans who had been using their GI Bill funds at an ECA campus.

In their letter to ECA, Senator Warren, Ranking Member Cummings, and Rep. Bonamici detailed ECA's long history of financial instability and demanded a full accounting of events leading up to its collapse.  The lawmakers also expressed concern about whether ECA appropriately warned students and regulators about the company's precarious financial standing as it teetered on the brink of collapse, and asked ECA a series of questions to better understand what ECA knew in advance of this collapse, and when company executives knew it. 

"The educational pursuits and financial well-being of countless students have been disrupted and put at risk, while massive costs have been incurred by American taxpayers," the lawmakers wrote in their letter to ECA.


In a separate letter sent to ACICS, the lawmakers demanded answers on the steps that ACICS should have taken to protect the approximately 18,000 students affected by ECA's collapse.  In particular, the lawmakers questioned why ACICS continued to grant accreditation to ECA schools when others would not, and why ACICS did not require formal "teach-out" agreements in timely fashion to protect students and taxpayers when the collapse finally happened.  ACICS was the same organization that accredited ITT and Corinthian Colleges - two other huge, for-profit colleges that have failed in recent years.

"The timeline of the ECA collapse and the company's interactions with ACICS are deeply troubling.  ACICS's oversight shortcomings potentially enabled ECA to continue its business as usual enrolling students and receiving federal student aid funds while ECA struggled financially," wrote the lawmakers in their letter to ACICS.

Senator Warren also led seven of her Senate colleagues in writing to Education Secretary Betsy DeVos demanding the Department take immediate steps to aid and protect students, veterans, and taxpayers in the wake of this significant collapse. Joining Senator Warren in sending this letter were Senators 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 Department has an urgent responsibility to help the students it failed to protect and to provide these students with clear, helpful, and actionable guidance regarding their options, including their eligibility for closed school loan discharges, borrower defense claims and discharges, and their options for completing their education," the senators wrote in their letter to Secretary DeVos.

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

Earlier this month, Senator Warren and Rep. Bonamici led eleven of their Senate and House colleagues in urging Education Secretary Betsy DeVos and officials at the Department of Education to immediately rescind the decision to fully reinstate federal recognition of ACICS.