Dive Brief:
- The U.S. Consumer Financial Protection Bureau is suing Corinthian Colleges, the financially troubled for-profit higher education company that has managed to aggravate just about every regulator and attorney general in its path.
- The lawsuit seeks to put an end to Corinthian’s alleged predatory lending, which involved luring students to its schools with false promises of job placements and career counseling, charging exorbitant tuition prices paid for by high-cost loans, and then using bullying debt collection tactics that began when students were still in school, the bureau’s director said.
- The lawsuit seeks forgiveness for $569 million that students still owe on Corinthian loans, as well as for loans dating back to July 2011 — including some that have already been paid off.
Dive Insight:
The bureau's director, Richard Cordray, details some pretty outrageous practices in his statement on the Corinthian lawsuit. He says that Corinthian would boost its supposed job placement numbers by creating fake employers or by paying employers to hire graduates temporarily, and would even count a one-day job as a “career.” Often, its promised lifetime of career services amounted to forwarding Craigslist help-wanted ads to students.
In 2013, Corinthian charged between $33,000 and $43,000 in tuition and fees for an associate’s degree and $60,000 to $75,000 for a bachelor’s degree. Corinthian’s student loans were twice as expensive as federal loans, and three out of five students were likely to fall behind on payments within three years. Unlike with federal loans and most other private student loans, students had to start repaying their Corinthian loans when classes began. Students that fell behind were pulled from classes, denied computer access, told to meet with campus presidents to explain themselves, and denied their diplomas, among other collection methods.