On October 27, 2015, a federal district court entered a
final default judgment against
Corinthian Colleges, Inc. for engaging in deceptive lending
practices and illegal debt collection practices. The Consumer
Financial Protection Bureau (CFPB or the Bureau) filed suit against
Corinthian in September 2014, alleging that the company
"induced students to enroll in its programs through false and
misleading representations about its graduates' career
opportunities," including falsely inflating job placement
statistics. The CFPB further alleged that when students defaulted
on their loans, "Corinthian took illegal aggressive
action" to collect the debt, even while some students were
still in school.
In February 2015, the CFPB and the U.S. Department of
Education
announced more than $480 million in
forgiveness for student loans offered through Corinthian College,
Inc.'s Genesis loan program, in conjunction with the ECMC
Group's acquisition of several Corinthian campuses. However,
the Bureau's agreement with ECMC did not release Corinthian
from any liability, and the lawsuit against Corinthian continued
throughout 2015.
Corinthian filed for bankruptcy in May, however, and was unable to
defend against the suit. Corinthian has since been liquidated and
will therefore not be able pay the $530 million judgment entered
against it.
The CFPB remains "deeply concerned about risks facing student
borrowers" and "will continue to be vigilant in rooting
out harmful practices." Industry participants are encouraged
to review and, if necessary, update and strengthen their compliance
programs to help avoid CFPB enforcement action.
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