When for-profit schools came to the forefront, said Miller, “The government jumped in with both feet, supporting them because it was so politically popular.” However, student loan default rates have been skyrocketing. “The default rates on the student loan debt are higher than the graduation rates at these schools,” Miller noted. “Congress is now alarmed. A lot of education companies are not going to make it.”

Interestingly, for-profit educational institutions cannot file for bankruptcy because they would lose their federal funding. About 90 percent of funding for these schools comes from the federal government. They have to work out their issues outside of filing, said Miller. “That reduces the leverage everyone has to get a deal done. You have to involve the Department of Education in that plan. That Department doesn’t always have the same economic incentive that a lender might, so it makes the workout plan that much more difficult.”

“You need to have a plan,” added Miller. “Either to sell it to someone else or restructure yourself. Focus on operational things. Spend more on curriculum. Focus on one or two areas rather than 15. If you are an honest company, the government is going to want to work with you, so that’s the good news.”