How would Tennessee college students feel if their school suddenly closed? That is the news that thousands of students across the country recently heard when for-profit Anthem Education filed for business bankruptcy in late August. The college and career institute chain had 41 campuses before bankruptcy filing and hopes to keep 28 of them in operation. However, the campuses are no longer eligible for federal student aid, which accounts for 90 percent of their revenues.
Anthem Education is dealing with a cash flow issue. It has up to $10 million in assets, but debts total anywhere from $50 million to $100 million. This bankruptcy comes on the heels of the announcement that Corinthian Colleges will close or sell its 107 campuses. There are rumors that International Education Corporation will be acquiring the 28 remaining Anthem campuses.
The closures were a shock to students who suddenly had nowhere to go for their education. To make matters worse, Anthem Education is refusing to offer refunds to the students. The students will be on the hook for their student loans unless they act quickly to discharge them.
While the campus closures may have come as a surprise, Anthem Education has been struggling financially for quite some time. It reached its peak in 2006 with nearly 22,000 enrolled students. Just four year later, enrollment had dwindled down to 12,792 students. Despite opening 11 new campuses in 2012, Anthem served just 10,000 students before the bankruptcy.
Although the company experienced financial success in 2006, its profitability did not last forever. It takes a lot of hard work to maintain a company's growth, and sometimes that growth stagnates. Once a company experiences overwhelming debt, bankruptcy is often the only option. Fortunately, bankruptcy offers many advantages and does not always mean the end of a business.
Source: Inside Higher Ed, "Anthem Bows Out," Charlie Tyson, Aug. 29, 2014