MANASSAS, Va., Jan. 27, 2001 -- Computer Learning Centers has filed for Chapter 7 bankruptcy, less than two weeks after the U.S. Department of Education stopped pre-paying financial aid and demanded the return of $187 million.
CLC was until recently one of the nation's fastest-growing chains of vocational training schools. It had more than 9,500 students at 25 training centers in 11 states, but cash-flow problems quickly overtook it following the Education Department action.
Students arriving at CLC centers Monday found the schools closed. Teachers and other staff members say they have not been able to cash their paychecks.
Under Chapter 7, a company goes out of business, liquidates its assets and pays creditors whatever it can, generally much less than what they are owed. Students and employees would be among the creditors in the CLC filing.
Federal and state education officials say they will help students complete classes at other schools, find new programs or get their loans forgiven. Sallie Mae, the lender for most of the students, has set up a hotline for stranded students -- 800-377-4446.
Education Department officials say that students who paid the school directly, using their own funds, may have difficulty getting refunds. If the payments were made directly by Sallie Mae or other agencies, the loans will be forgiven, in most cases.
Many community colleges offer computer courses similar to CLC's and may offer the best options for most stranded students. Northern Virginia Community College said it had offered transfers and other assistance to CLC students.
Some students were just a week or two from graduation and officials say they are hoping to find institutions that will administer exams and grant certificates to those students.