On October 27, the U.S. District Court for the Northern District of Illinois awarded the Consumer Financial Protection Bureau $531.2 million against for-profit college chain Corinthian Colleges, Inc. for what the Bureau described as a "predatory" student lending program that the company administered. Prior to its liquidation through bankruptcy earlier this year, Corinthian was one of the largest for-profit, post-secondary education companies in the country. It oversaw more than 100 schools throughout the country – including those operating under the names Everest, Heald, and WyoTech – and had approximately 74,000 students.
The Bureau filed a Complaint against Corinthian on September 16, 2014. In that document, the Bureau alleged that Corinthian violated the Consumer Financial Protection Act of 2010, 12 U.S.C. 5511 et seq., and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., by persuading students to enroll in its loan programs through false and misleading claims about its graduates' career opportunities. These representations supposedly included the suggestion that Corinthian effectively assisted students in finding jobs and the assertion that students were likely to obtain a permanent job upon graduation. Other alleged deceptive tactics included defining a "placement" as any job that lasted a day, paying employers to temporarily hire Corinthian graduates, falsifying placement information, and providing meager career services.
The Bureau also accused Corinthian of encouraging its students to sign up for high-interest "Genesis" loans and then strong-arming them into covering missed payments while they were still enrolled as students. These "aggressive collection efforts" supposedly included enlisting campus personnel to pull students out of class, preventing students from attending and registering for class, and terminating students' computer access. According to the Bureau's Complaint, Corinthian further claimed that the Genesis loans were made by an independent third-party entity and that it did not have a financial interest in the loans, when in fact Corinthian did have such an interest.
In its default judgment order, the U.S. District Court directed that the Bureau deposit any funds received in satisfaction of the judgment into a Bureau-administered fund to be used for redress to affected consumers.
The case was CFPB v. Corinthian Colleges, Inc., No. 1:14-cv-07194 (N.D. Ill).
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