Capitol Alert

Heald College gets temporary reprieve in student aid dispute

A week after halting scholarship payments to Heald College because of concerns over its financial health, the California Student Aid Commission offered the troubled for-profit chain a temporary reprieve Friday.

As Heald representatives vociferously objected to the school’s treatment in recent weeks, the commission gave the college until the end of its spring quarter to come into compliance by providing audited statements showing its finances and administration are in stable condition.

Under the plan, Heald’s eligibility for the Cal Grant scholarship program will end in April if it does not come into compliance. The suspension of aid payments for current students will continue until that time, but they may still be paid in a lump sum after termination if students are able to finish out the term.

“We see this as a compromise decision,” Heald spokesman Joe Hixson said. He added that Heald expects to provide the commission with the documents it is seeking by the end of March and plans to temporarily finance students until aid payments are restored.

“We intend to make all students whole on this,” he said.

During its meeting, the commission debated how it could do the least amount of harm to Heald students while still protecting the taxpayer-funded aid money. Corinthian Colleges, Heald’s parent company, has been in severe financial distress since last summer and is in the process of selling off Heald, which operates campuses in Rancho Cordova, Roseville and eight other Northern California cities.

“If Corinthian fails, Heald is going out of business without a buyer,” said Keri Tippins, the commission’s general counsel. “That is the fundamental issue – what is happening with Corinthian.”

Heald’s legal counsel, Ed Cramp, argued that the college had not been given fair warning prior to the halt in payments, which could total about $14 million in awards by the end of the spring quarter, affecting 4,497 students. With little chance to respond and no due process, the commission had “run roughshod over the rights of the students and the rights of the institution,” he said.

“We are here to help. We want to communicate,” Cramp added, “but it’s got to be a two-way dialogue.”

Call The Bee’s Alexei Koseff, (916) 321-5236. Follow him on Twitter @akoseff.