The U.S. Consumer Financial Protection Bureau alleges that for-profit college chain Corinthian Colleges has engaged in an illegal predatory lending scheme.
In its lawsuit announced Tuesday, the CFPB is requesting relief to the students who collectively have taken out more than $500 million in private student loans to attend a campus program under Corinthian Colleges, one of the largest for-profit, post-secondary education companies in the nation.
The publicly traded company has more than 100 school campuses across the country. The company operates schools under the names Everest, Heald, and WyoTech. As of last March, the company had approximately 74,000 students.The CFPB alleges that Corinthian “lured tens of thousands of students” to take out private loans for expensive tuition by advertising “bogus job prospects and career services.”
Corinthian then used illegal debt collection tactics to “strong-arm students” into paying back those loans while still in school, the CFPB said.
In June, the U.S. Department of Education delayed Corinthian’s access to federal student aid dollars because of reports of malfeasance, the CFPB said.
Since then, Corinthian has been scaling down its operations as part of an agreement with the Department of Education. However, Corinthian continues to enroll new students.
The Bureau is seeking to halt Corinthian’s practices.
“For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair,” said CFPB Director Richard Corday.
“We believe Corinthian lured consumers into predatory loans by lying about their future job prospects, and then used illegal debt collection tactics to strong-arm students at school,” Cordray adds. “We want to put an end to these predatory practices and get relief for the students who are bearing the weight of more than half a billion dollars in Corinthian’s private student loans.”
The complaint against Corinthian can be found here.