Thread regarding Corinthian Colleges Inc. layoffs

"The programs are outpriced for someone who makes any money as monthly payments would be too high."

If the 90/10 were 50/50, the students would need to pay $1 cash for every $1 in federal financial aid, so you would suggest tuition would be twice as much as need be. This totally ignores the ability to attract cash customers at lower prices. If the school charges twice what it needs to, then it would be lucky to get a single cash customer. Essentially this is what has happened, but to a lesser degree, with raising the prices to comply with the 90/10 rule. The article basically suggests that schools that attract good customers don't have the problem, so CCi only attracts the worst customers, so it attempts to charge these bad customers more, which only spirals the situation worse, as the article suggests. Obviously the school had two options: Raise or lower prices, and it choose raise prices. Just recently, by the way, JM has suggested maybe charging more was the wrong thing to do. Check out the latest investor call. JM suggested that by charging less, and in some cases under $5,000, the 90/10 compliance would be better.

15199: If you're going to just ramble on without presenting any evidence or even logic, go right ahead. I'm going to ignore you. In case I didn't make the mechanism clear enough before, try reading this: http://divbyzero.newsvine.com/_news/2009/03/18/2563698-the-hidden-factor-driving-up-the-cost-of-a-college-education

It is obvious that CCi is going back to basic economics in more than one way.

I call that drinking the CCi Fruit Punch. Time to go back to basic economics.

Honestly, if you're really trying to question the common knowledge that 90/10 drives up prices, you just need to stop. I was in MANY 90/10 meetings at both the regional and divisional levels. Different options were discussed. The only viable one was to raise prices and get the students alt loan/Genesis (funds that could count as cash) to make the numbers. It's not theoretical. 90/10 drove up CCi's prices.

Just one 100% cash student paves the way for nine students to use 100% financial aid. How many more cash customers would there be if prices were lower?

No, of course that wasn't the intent of the rule. It was an unintended consequence. The rule is intended to make sure that only "real" colleges get aid money. To Congress that means colleges that would get a significant proportion of funds from employer reimbursement, cash savings, etc. They view targeting low-income populations not as serving a poorly served demographic, but as shady opportunism.

If there the rule was 80/20 would prices be even higher?

Anonymous15184- So you are suggesting that ED put in the 90/10 to raise for-profit prices?

15181: Your question doesn't make any sense. Were you the poster who stated that 90/10 lowered prices? If so, maybe you're just not cut out for math and economics and shit like that. Stop trying to understand it and trust those of us who do. 90/10 raises prices.

If we start with the lowest price when students pay 100% cash, what percentage cash do prices peak?

That's the point. If students were using their own cash instead of government funds, and if there were no 90/10 rule, the market would function in a much more competitive fashion. It is widely believed that prices would be much lower.

0/100: What would prices be if there was no financial aid?

Okay, that makes no sense at all. There are two independent first year students - me and my friend. I have a near-zero EFC, so I'm eligible for $5,500 Pell Grant, $3,500 sub and $4,000 unsub. My aid comes to $13,000. My friend makes more money and doesn't qualify for any Pell, so he just gets the $7,500 loans. With a tuition of $13,000 I am covered but my friend must come up with $5,500 cash. So between us they get my $13,000 plus my friend's $7,500 in aid for a total of $20,500 against my friend's $5,500 cash. That's over 25% cash and easily meets 90/10. CCi's 90/10 problem is that in many of their schools, ALL of the students have zero EFCs. That means they all get the $13,000, so the tuition has to up to $14,500 to force them to provide the 10% cash. 90/10 always drives up prices.

No, quite the contrary. If the students actually have to pay 10% cash, prices should go down, not up. If no cash is required, then prices can be higher, not lower. If the students had to come up with 50% cash, would the price be even high? I doubt it.

15143: I think most of us understand 90/10. I'm not sure why you're posting about it. Are you trying to justify the jacked up prices by saying that the feds forced CCi to raise them?

Imagine if the 90/10 rule were a 10/90 rule. How much would CCi have to 'jack up the price?' The basic argument is that by having to get the 10% cash out of the student, prices need to be increased. So if you needed to get 20% cash, prices would need to be even higher. And if you had to get 90% cash out of the students, how high would the price need to be?

I haven't heard anyone here mention the 90/10 rule. I realize that it's one of the reasons that CCi jacked up their prices, but for the most part that aspect hasn't been a big part of the bad press.

It is obvious that some don't understand that the 90/10 rule is not measured on GAAP/accrual accounting. The 90/10 is based on cash accounting, so the cash must be actually collected. The school cannot simply forgive a large debt and have that count for the 10% cash. I would mention taxes, but the forgiven debt would likely qualify in the undergraduate education category, so the students won't need to pay taxes on any forgiven debt/grant.

This is the kind of thing the press eats up. If it's true, they are going to have a field day with it. For those of you following the controversy, most of the reports center around the schools overcharging to get the most financial aid that they can. Several have mentioned that CCi didn't even care if students paid back Genesis loans since the fed dollars already gave them a good profit margin. This is just CCi admitting that it has jacked up prices to capture every penny of available fed funds. They can give people a $7000 discount and still make money! It's a terrible idea!

why dont you ask fin-aid 15100 then could explain it to all of it. If your getting this info from student how many time think one thing it mean something else

Genesis loans are not federal loans, so Genesis loans are not forgiven.

If a parent is required to take a plus loan then they can not get the "grant" if the parent is approved. So it mainly applies to students who are independent. not sure if ED knows of this or if it is in compliance with everything going on. But I know if active students found out that people are getting that 6k forgiven and don't have to pay I bet there would be a pretty big uproar.

Isn't the ED planning on forgiving loans to student's currently enrolled? They now will only be responsible for the $500 now and money is still being made!

cash monitoring doesn't mean that ED employees are observing the operations. Obviously we haven't been good about disclosing to ED, that's why this situation is happening.

Wouldn't the ED already know about this since CCI is being monitored?

In effect this means that some students will pay more than others. So if a student is low income and qualifies for more aid (Pell, SEOG) they will be charged a higher tuition than a student with lower need. That will NOT go over well. If that is an incorrect assessment of the program , please let me know.

Conference call is happening now

No hear say. Ive had 2 students already get it.

This is first heard about it. Our campus never told student this at all. So do you have email or papper stating this fact. If not start another hear say