Skip to content
ADVERTISEMENT
Sign In
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Virtual Events
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
  • More
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Virtual Events
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
    Upcoming Events:
    Trump Webinar Series
    Mental Health Forum
    Using Big Data to Improve Social Mobility
Sign In
Government

Federal Watchdog’s Lawsuit Accuses Corinthian Colleges of Predatory Lending

By Kelly Field September 16, 2014
Washington

Corinthian Colleges, the crippled for-profit higher-education company that is in the process of winding down its operations, is in trouble again, this time with the federal Consumer Financial Protection Bureau.

On Tuesday the bureau filed a lawsuit accusing Corinthian of predatory lending and illegal collection tactics. The lawsuit seeks an end to the alleged practices and debt relief for affected borrowers.

To continue reading for FREE, please sign in.

Sign In

Or subscribe now to read with unlimited access for as low as $10/month.

Don’t have an account? Sign up now.

A free account provides you access to a limited number of free articles each month, plus newsletters, job postings, salary data, and exclusive store discounts.

Sign Up

Corinthian Colleges, the crippled for-profit higher-education company that is in the process of winding down its operations, is in trouble again, this time with the federal Consumer Financial Protection Bureau.

On Tuesday the bureau filed a lawsuit accusing Corinthian of predatory lending and illegal collection tactics. The lawsuit seeks an end to the alleged practices and debt relief for affected borrowers.

“We believe Corinthian lured in consumers with lies about their job prospects upon graduation, sold high-cost loans to pay for that false hope, and then harassed students for overdue debts while they were still in school,” Richard Cordray, the bureau’s director, told reporters on Tuesday.

In a written statement, Corinthian said it “strongly disputes” the lawsuit, which “mischaracterizes both the purposes and practices of the ‘Genesis’ lending program.” It accused the bureau of ignoring “clear, easily obtainable evidence that thousands of Corinthian graduates are hired into permanent positions by large and small employers across the U.S. every year” in favor of “isolated incidents” that the company itself identified, reported, and corrected.

“It is deeply misleading to ignore the actions by Corinthian that brought these issues to light,” the statement says.

The lawsuit comes seven months after the bureau, the nation’s top consumer watchdog, filed a suit accusing another for-profit college company—ITT Educational Services Inc.—of pushing its students into high-cost private loans that it knew were likely to end up in default. ITT has moved to dismiss the case.

For Corinthian, the lawsuit is the latest in a string of troubles dating to June, when the U.S. Department of Education began withholding financial-aid payments from the company. Those restrictions, coupled with the company’s existing cash-flow problems, pushed Corinthian to the brink of bankruptcy. Within days the company had entered into an agreement with the department to sell or close most of its campuses in exchange for continued access to federal aid.

In the agreement, the department said it had taken action “after the company failed to provide records concerning enrollment and job-placement data required by federal law, and failed to fully address concerns about its practices, including faulty job-placement data used in marketing claims to prospective students and allegations of altered grades and attendance.”

Job-Placement Rates

The bureau’s complaint also centers on the company’s job-placement data, accusing Corinthian of inflating its rates by creating fictitious employers, counting jobs that lasted only one day, and paying employers to temporarily hire its graduates. The lawsuit asserts Corinthian used those inflated rates to convince students that their programs were worth the high cost—and the debt.

In 2013, Corinthian charged $33,000 to $43,000 for an associate degree, the complaint says. Tuition and fees for a bachelor’s degree ranged from $60,000 to $75,000.

ADVERTISEMENT

In the complaint, the bureau says Corinthian deliberately set its tuition higher than federal loan limits in order to comply with the federal 90/10 rule, which requires for-profit colleges to receive at least 10 percent of their revenue from nonfederal sources. By creating such a “funding gap,” Corinthian forced students to rely on its high-cost, private “Genesis loans.”

When students inevitably struggled to make monthly payments, the lawsuit alleges, Corinthian would pull them out of class, block their access to classes and materials, and withhold their diplomas.

The bureau is seeking compensation for the tens of thousands of borrowers who took out Genesis loans from July 2011 to March 2014, including those who have already repaid their debts. The total outstanding balance of the loans exceeds $569-million.

Corinthian disclosed the bureau’s investigation to investors in August, saying it had been accused of violating the Dodd-Frank Act and the Fair Debt Collections Practices Act. At the time, the agency told the company it would be open to a settlement if Corinthian agreed to a list of conditions, including informing students nationwide of the potential sale of their campuses, as it has done in California.

ADVERTISEMENT

Bureau officials declined to say whether the lawsuit meant that Corinthian had failed to meet its conditions.

“We can’t comment on discussions with Corinthian prior to filing of the complaint,” said Ori Lev, deputy enforcement director for litigation, in the call with reporters.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Tags
Law & Policy Political Influence & Activism
Share
  • Twitter
  • LinkedIn
  • Facebook
  • Email
About the Author
Kelly Field
Kelly Field joined The Chronicle of Higher Education in 2004 and covered federal higher-education policy. She continues to write for The Chronicle on a freelance basis.
ADVERTISEMENT
ADVERTISEMENT

More News

Illustration showing three classical columns on stacks of coins, at different heights due to the amount of coins stacked underneath
Data
These 32 Colleges Could Take a Financial Hit Under Republicans’ Expanded Endowment Tax
Conti-0127
Finance
Here’s What Republicans’ Proposed College-Endowment Tax Could Look Like
Illustration of a magnifying glass highlighting the phrase "including the requirements set forth in Presidential Executive Order 14168 titled Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government."
The Fine Print
The NIH Is Requiring Grantees to Follow Trump’s Anti-Trans Executive Order
New York City police arrested dozens of Pro-Palestinian protesters on Columbia University on Wednesday evening after they took over part of a central library in New York, USA on May 7, 2025.
'A Different Playbook'
Facing New Protests and Political Pressure, Colleges Are Taking a Harder Line

From The Review

Illustration depicting a pendulum with a red ball featuring a portion of President Trump's face to the left about to strike balls showing a group of protesters.
The Review | Opinion
Trump Is Destroying DEI With the Same Tools That Built It
By Noliwe M. Rooks
Illustration showing two men and giant books, split into two sides—one blue and one red. The two men are reaching across the center color devide to shake hands.
The Review | Opinion
Left and Right Agree: Higher Ed Needs to Change
By Michael W. Clune
University of British Columbia president and vice-chancellor Santa Ono pauses while speaking during a memorandum of understanding  signing ceremony between the Tsilhqot'in National Government and UBC, in Vancouver, British Columbia, on Dec. 8, 2021.
The Review | Opinion
Santa Ono Flees for Florida
By Silke-Maria Weineck

Upcoming Events

Plain_USF_AIWorkForce_VF.png
New Academic Programs for an AI-Driven Work Force
Cincy_Plain.png
Hands-On Career Preparation
  • Explore Content
    • Latest News
    • Newsletters
    • Letters
    • Free Reports and Guides
    • Professional Development
    • Virtual Events
    • Chronicle Store
    • Chronicle Intelligence
    • Jobs in Higher Education
    • Post a Job
  • Know The Chronicle
    • About Us
    • Vision, Mission, Values
    • DEI at The Chronicle
    • Write for Us
    • Work at The Chronicle
    • Our Reporting Process
    • Advertise With Us
    • Brand Studio
    • Accessibility Statement
  • Account and Access
    • Manage Your Account
    • Manage Newsletters
    • Individual Subscriptions
    • Group and Institutional Access
    • Subscription & Account FAQ
  • Get Support
    • Contact Us
    • Reprints & Permissions
    • User Agreement
    • Terms and Conditions
    • Privacy Policy
    • California Privacy Policy
    • Do Not Sell My Personal Information
1255 23rd Street, N.W. Washington, D.C. 20037
© 2025 The Chronicle of Higher Education
The Chronicle of Higher Education is academe’s most trusted resource for independent journalism, career development, and forward-looking intelligence. Our readers lead, teach, learn, and innovate with insights from The Chronicle.
Follow Us
  • twitter
  • instagram
  • youtube
  • facebook
  • linkedin