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November 21, 2014

Nonprofit Student-Loan Guarantor to Buy Commercial Colleges

Educational Credit Management Corporation, a nonprofit that has drawn fire for its tactics in collecting student loans, is buying nearly half of the campuses run by Corinthian Colleges, a soon-to-be-defunct for-profit colleges operator, The Chronicle of Higher Education and Bloomberg report. The $24-million deal, announced Thursday and expected to close in January, will see the credit group take over 56 of Corinthian's 107 colleges and become the country's largest nonprofit operator of career schools.

ECMC, as the organization is known, said it will cut tuition and overhaul curricular offerings at the 56 colleges, members of the Everest and WyoTech systems that offer degrees in a variety of professional and industrial trades. About half of the purchase price will go to the U.S. Department of Education, which reached an agreement with Corinthian in July for the company to close or sell its institutions amid numerous federal and state inquires into its recruitment, lending, and marketing practices.

ECMC works with the Education Department to oversee student loans. Advocacy groups have criticized the nonprofit for allegedly employing high-pressure tactics to collect from student debtors.