On September 16, 2014, the Consumer Financial Protection Bureau (CFPB) announced that it had filed a lawsuit against Corinthian Colleges (Corinthian), which operates nearly 100 for-profit colleges under the names Heald, Everest, and WyoTech. The CFPB charges Corinthian with predatory lending and alleges that Corinthian inflated tuition costs, misrepresented students’ career prospects, and engaged in aggressive and embarrassing debt collection tactics, even while students were still enrolled in school. The Complaint outlines in detail Corinthian’s alleged internal policies of targeting individuals with “low self-esteem,” who are “isolated,” and have “minimal to non-existent understanding of basic financial concepts.”
Induced by allegedly false employment statistics, prospective students took out high-interest loans from supposed third-party lenders. According to the CFPB, however, Corinthian had an interest in the loans, either from origination or beginning shortly thereafter. As alleged in the Complaint, this improper and undisclosed interest led Corinthian to violate the Fair Debt Collection Practices Act by engaging in harassing and abusive debt collection tactics, which, according to the CFPB, include barring students from classes and school resources, circulating lists of students with delinquent loans, and withholding diplomas.
CFPB Director Richard Cordray lamented that, “[f]or too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair.” Corinthian, which is in the process of shutting down or selling its U.S.-based schools, “strongly disputes the allegations” in the Complaint. Even so, the CFPB’s lawsuit seeks injunctive relief, civil penalties, and to compel Corinthian to provide over $500 million in debt relief.