As the nation's private, for-profit technical colleges come under increasing fire for promising students more than they can deliver, the president of one of the largest — Corinthian Colleges Inc. of Santa Ana — said Tuesday that he was resigning.
Matt Ouimet, who has been president of the company since July 2009, said he was leaving "for personal reasons." His decision came as Congress is preparing to open its third set of hearings on technical schools.
Corinthian spokesman Kent Jenkins said that Ouimet, a former executive at Walt Disney Co. and Starwood Hotels executive, was not asked to leave. "This was Matt's decision, and he made it for personal reasons and that's it," Jenkins said.
Corinthian, which is publicly traded, owns 122 campuses across the country, including Heald Colleges, Everett Colleges and Wyotech Colleges. The schools offer programs for students seeking training as medical and dental assistants, auto mechanics, and other skilled workers. Some of the colleges have also recently started entrepreneurship programs.
Its campuses were among those cited by federal investigators in August as places where recruiters made "deceptive" or "questionable" statements to undercover agents posing as potential students.
The company's stock has also taken a pummeling beating recently, dropping about 65% of its value over the last year. The price fell nearly 7% on the news of Ouimet's departure, closing Tuesday at $5.90 on Nasdaq.
The drop in stock price over the last year came despite an increase in revenue and income. Corinthian's most recent financial report, for the three months that ended June 30, showed net income of $33.9 million, up from $23.2 million during the same period last year.
The company has 15,900 employees, including about 5,600 full- and part-time faculty members.
Federal officials have been investigating private, for-profit colleges for several months, looking into claims that the institutions lead students to believe that they are more likely to get jobs upon graduation than they really are.
The GAO investigated 15 colleges, finding that many encouraged students to lie on their financial aid applications and were vague about how much the classes would cost or how long it would take to earn a degree or other educational certificate.
Private, for-profit colleges received $26.5 billion in government support last year, much of it in the form of financial aid for students.
Jenkins confirmed that the Senate Committee on Health, Education, Labor and Pensions had requested data from Corinthian on admissions practices and other data from its schools. He also said that the company had been among those cited in the August report on for-profit colleges by the General Accounting Office.
The GAO report did not identify the colleges it had examined by name. It said all 15 of the campuses studied had engaged in "deceptive" or "questionable" practices.
Jenkins confirmed that two Corinthian campuses were mentioned in the report, although not by name. At a campus in Arizona, recruiters checked an applicant's eligibility for financial aid twice, once including the undercover agent's $250,000 in savings, and another time as if the savings didn't exist. Recruiters at the company's schools were also not clear about the length of time it would take to complete a course of study, or the exact cost, according to portions of the report that Jenkins said referred to colleges owned by Corinthian in Texas and Arizona.
When Ouimet's resignation becomes effective at the end of this month, his responsibilities will be assumed by Chief Executive Peter Waller, Jenkins said.