OK, you know something’s up when the parent company tries to blame the federal government for their financial woes, right?

It took a tiny bit of sleuthing, but I eventually unearthed a link to a copy of the press release from Career Education Corporation announcing the eventual closure of all sixteen Le Cordon Bleu culinary school locations in the United States in late 2017.  While the announcement was made last month, I wanted to pause a bit before launching into my usual screed.  Time’s up!

According to the press release, “‘New federal regulations make it difficult to project the future for career schools that have higher operating costs, such as culinary schools that require expensive commercial kitchens and ongoing food costs[…]’ said Todd Nelson, president and CEO of Career Education.” Really? The federal government, through regulation, is wiping out all future prospects for companies like CEC who manage for-profit, career-oriented schools like Le Cordon Bleu?  What a load of bulls**t!

Surely, Mr. Nelson, you can do better than that in terms of explaining why – in this new era when student loan programs, (and student debt itself), are under such heavy scrutiny – it seems corporations like yours are now “at risk” and must take these drastic measures!

OK, so after a little poking around, I found a copy of what I believe are the purportedly onerous regulations.  Federal law requires proposed changes to regulations of this sort be published well in advance of being enacted, thereby affording impacted institutions sufficient time to a) lobby for changes to said regulations, and b) prepare to comply with said regulations, once they’re enacted.

Here’s a link to the second announcement about these particular regulatory changes found on the Information for Financial Aid Professionals website.  [Incidentally, IFAP is affiliated with the U.S. Department of Education.]  Embedded in this announcement is a link to a .PDF version of the regulations – all 462 pages of ’em!  I’ll come back to this in a moment, but first, a few words about organizational agility…

Why do I emphasize second announcement, you ask? Well, it’s because these regulatory changes were initially debated/negotiated back in January and March of 2012!  Do the math.  That’s two years before CEC started shopping the culinary schools, (at least according to the company’s December 2015 press release referenced above), and two and a half years before they announced they’ll either sell, or eventually close, all of the schools.  So much for being nimble!

That said, economic Darwinism seems to be the order of the day, so let’s delve in a bit deeper, shall we?  To recap, new student loan regulations were proposed/negotiated in early 2012, then announced, public comments collected, the regulations were – again – revised, and a final version of the regulations were announced at the end of July 2013, (to go into effect at the beginning of the next fiscal year).  In 2014, CEC attempted to peddle the schools, couldn’t find a buyer and issued a statement in May of 2015 saying they’d either divest the schools or offer a so-called “teach-out” program to already-enrolled students as of a certain date.  Fast forward to December 2015, and we see the press release referenced at the beginning of this post.  Like I said, so much for being nimble…

Here’s what I think really happened.  For-profit educational institutions of countless shapes and sizes collectively soiled themselves when President Obama announced he would be pushing for student loan/student debt reforms way back in 2011. The proposed regulations were revised over a roughly two-year period of time, and, in the brave new world of actually getting your money’s worth as a student, more than a few of these for-profit educational institutions realized the jig was up, (back in July of 2013). Uh, oh.  A fundamentally-flawed business model plus heavy scrutiny from a regulatory agency means you’re in the ‘…going out of business…’ business – yikes!

“OK boys, time to find a sucker or fold up the tents! Which is it going to be?”

Can’t you just hear those board room conversations? Well, on December 16th, we got our answer, didn’t we?

Now, it’s entirely possible I’m referring to the wrong “…new federal regulations…” making life so difficult for CEC, (and, apparently, others). Rather, could it be the specter of a proposed, (and yet-to-be-launched), federal rating system for colleges that’s spooking executives at these institutions? Holy cow! Is the prospect of the federal funds you rely so heavily upon, (read ‘student loans’), being influenced by a “pay for performance” model really that terrifying? Sorry folks, but pay for performance is precisely what’s needed here! The starry-eyed souls who enroll in culinary schools – like Le Cordon Bleu – deserve the very best educational experience they can get. If the institution providing that educational experience can’t – or won’t – deliver, then the institution should suffer the financial consequences, not the student. The formula is not – repeat not – signing up as many would-be James Beard award-winners as possible, (lured by seemingly affordable student loans), and then shoveling them though the program, skill acquisition be damned.

Bad karma, my man, bad karma indeed.

“Joey, did we tell you about your student loan terms? Yeah, now that you’re graduating, it’s time to start paying off the umpty-ump thousand you owe the lender […certainly not us here at the school, tee hee, tee hee…] so we hope to hell you get a job. What?! Wait?! You did get a job, but you’re only earning minimum wage? Oh, that’s too bad – tough luck – hope you figure out how to service that loan… Thanks for playing!
[pause]
OK, who’s next in line?”

I weep for the would-be culinary school graduates who won’t be able to pursue their dreams at Le Cordon Bleu, (at least not here in the United States), and will have to seek the necessary skills and training elsewhere.

Shame on the incompetents running for-profit corporations addicted to what they view as guaranteed – and eternal – federal funding. That’s an entirely unrealistic, (and frankly idiotic), level of expectation to cling to. Go figure out how to effectively manage uncertainty with respect to capital requirements and operating expenses – that’s your f**king job!