Le Cordon Bleu announced that it has closed all of it’s 16 US campuses. Students that are progressing
through the classes will be able to continue until they graduate as part of a “teach out.”
Predatory lending practices and aggressive recruiting tactics are the 2 main issues Le Cordon Bleu was under while making the decision to shut down. Todd Nelson, the President of Le Cordon Bleu said, the school has been searching for a new owner but decided this was a better route for current students and allows parent company Career Education Corporation to maintain its rights over the brand.
Le Cordon Bleu’s degrees weren’t worth the loans, according to graduates that accused the school of misleading students about their job prospects after earning an expensive degree.
Tuition runs between $16,000 and $42,500 a year, according to Le Cordon Bleu’s 2014-2015 catalog. The culinary empire first showed signs of collapse after settling a 2013 class action lawsuit for $40 million led by former students who alleged that Career Ed recruiters oversold their job prospects after graduation. Many complained that they made salaries of just $12 an hour after earning degrees from the prestigious academy, and worked in menial jobs such as line cooks and baristas that did not require costly training.
The brand has also fallen under federal scrutiny under the Obama administration’s gainful employment rule. The new statute, which went into effect last July, cuts off federal funding from for-profit schools like Le Cordon Bleu if students borrow money at high rates, but earn peanuts after graduation. The new rule demands that student loan payments don’t exceed 20% of a graduate’s income after taxes to protect students from being buried in debt. Yet a recent Senate report reveals Le Cordon Bleu schools show unusually high rates of students withdrawing from the associate program and defaulting on student loans. Former students from Le Cordon Bleu are now eligible for loan forgiveness.
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