Federal Regulators Sue Corinthian Colleges for Predatory Student Loans

By Julianne Hing Sep 17, 2014

The for-profit college giant Corinthian Colleges swindled students into signing up for expensive student loans by dangling false promises of future employment, then engaging in illegal debt collection schemes to force students to pay up, the Consumer Finance Protection Board (CFPB) alleges in a lawsuit the agency filed Tuesday, the Huffington Post reported. 

It’s just the latest blow to the company, which was forced to sell off or wind down the vast majority of its 102 campuses across the country in a deal it reached with the U.S. Department of Education in July. More than 70,000 students were enrolled in Corinthian campuses this summer, which included Heald College, Everest Colleges and WyoTech schools.

Corinthian had a long list of dirty marketing and number-fudging tricks it used to entice students to sign up for its career-training and postsecondary education programs, including inflating its job placement rates by defining a "placement" as "any job that lasted one day, with the promise of a second day," according to the complaint. Corinthian also intentionally marketed its programs to students who were "isolated," and who had low-self esteem and few people to rely on. What’s more, Corinthian marketed private student loans that the company had a financial interest in, knowing full well that the majority of borrowers would default on them. 

In perhaps the most shocking complaint, the CFPB alleges that Corinthian Colleges also burnished its post-graduate job placement rates by counting students who were incarcerated after leaving Corinthian as "unavailable for employment." Corinthian employees would, according to the CFPB complaint, "search the Internet for graduates’ names for any purported evidence of incarceration … irrespective of whether the name match was, in fact, an identity match" and then drop supposedly incarcerated students from the pool of students it counted in its job placement rates. 

Catch up on Colorlines coverage of Corinthian’s dissolution earlier this summer, and read the CFPB’s complaint in full (PDF).