The abrupt suspension of classes this week by national vocational school operator Computer Learning Centers Inc. left students such as Michael Snipstad of Los Angeles worried about how they will get their money back or repay thousands of dollars in education loans.
Snipstad took out a $15,000 loan in hope of earning the equivalent of a two-year college degree in network administration from CLC. He was five months into the 20-month program when the company suddenly closed the school in the mid-Wilshire district on Monday. He has already paid $1,500 on his loan from a private lender, but is still liable for the balance, which he had hoped to pay off after landing a good technical job upon graduation.
"I feel a little uneasy because of the uncertainty of how the process for a refund works," Snipstad said. "And I have a problem paying for something I no longer get the benefit of."
About 9,600 students, including 709 in Los Angeles, and 55 local instructors were affected by CLC's closures of its 25 campuses in 11 states. The Manassas, Va.-based company, which offered degrees and certificates in information technology and computer-related education, was expected to file for bankruptcy protection, possibly as soon as today, according to the Department of Education.
CLC didn't return repeated calls for comment. In a statement, the company cited several reasons for its closures: a serious cash crunch, stricter federal requirements for receiving financial aid payments and the failure of negotiations with a prospective buyer.
Los Angeles students were upset that they were not warned of the pending closure. Students showed up Monday only to find classrooms locked and fliers that read "Classes are suspended."
"It was callous in some ways," said student Marco Juarez, 49. "If anybody had a clue, they should have informed us of the financial problems."
Making matters worse for the students was the lack of information about what to do next.
Luis Vargas of Los Angeles said he had paid off a $2,200 private loan but was uncertain whether he could get reimbursement.
"I paid so much money," said Vargas, who was five months from graduation. "Now I'm worried about getting my money back."
Some instructors have not been able to cash their final paychecks. Laura Knowles of Los Angeles said her bank has a hold on her paycheck until further notice from CLC.
Trading of CLC shares was halted Jan. 18 at 25 cents on Nasdaq.
State education officials said students who paid for their courses outright or used private loans are eligible to apply for a refund. Students can first try to get the money from CLC. However, the Department of Education has said that is unlikely because the company posted a loss of $6 million for the nine months ended Sept. 30.
As a last resort, students can apply within a year for a refund from the Student Recovery Tuition Fund, which is operated by the state Bureau for Private Postsecondary and Vocational Education, said Deborah Godfrey, a division analyst. The fund was created to help students recover funds or pay off private loans earmarked for education.
By law, students are guaranteed a full refund within 150 days if they decide not to continue their education, or a portion of it if they do.
Students with government loans, which accounted for about 64% of the tuition the CLC chain received, can be excused of all payments when they file a discharge form provided by the lender or by EdFund, a subdivision of a state agency that helps students with such matters.