WASHINGTON The Consumer Financial Protection Bureau has filed a complaint against Corinthian Colleges alleging the for-profit chain of colleges ran a predatory lending scheme and used unlawful debt collection practices.
In a lawsuit announced Tuesday, the CFPB alleges that Corinthian Colleges "lured tens of thousands of students" into taking out private loans by falsely advertising job prospects and career services, and then used illegal tactics to collect on students' debt. The CFPB is seeking relief for those affected. The agency estimates that students took out more than $560 million in private loans through the alleged scheme.
"For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair," CFPB Director Richard Corday said in a press release. "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."
Corinthian Colleges, Inc. has more than 100 school campuses nationwide. The chain's schools operate under the names Everest, Heald, and WyoTech. The CFPB said the Department of Education delayed federal student aid to Corinthian in June after receiving reports of wrongdoing. The company has already agreed with the Education Department to scale back its operations, but the CFPB claims that Corinthian continues to enroll new students. The CFPB lawsuit covers an investigation from July 21, 2011 to the present.
"Today's CFPB lawsuit alleges a pervasive culture across the Everest, Heald, and WyoTech schools that allowed employees to routinely deceive and illegally harass private student loan borrowers," the CFPB said in the release. "Based on its investigation, the CFPB alleges that the schools made deceptive representations about career opportunities that induced prospective students to take out private student loans, and then used illegal tactics to collect on those loans."
The CFPB is requesting that Corinthian compensate students who took out a so-called Genesis loan during the period of its investigation, regardless of whether the loan is now paid off.