Federal regulators have closed the books on their lawsuit against for-profit Corinthian Colleges, Inc., but there’s concern that the “nightmare” might not quite be over for former students. A federal judge entered a final judgment against the firm this week, at the Consumer Financial Protection Bureau’s request, declaring that Corinthian is still liable for $530 million. But the judgment is largely ceremonial, as the now-bankrupt firm can’t pay. Meanwhile, many former Corinthian students still hold debts from their time at the school.
“The CFPB remains concerned about efforts to collect on loans made in association with Corinthian’s illegal conduct,” the bureau said. “The CFPB will continue to pursue relief for consumers harmed by Corinthian’s unlawful conduct.”
The CFPB sued Corinthian last year, saying the firm has a “pervasive culture…that allowed employees to routinely deceive and illegally harass.” At the time, CFPB director Richard Cordray said the school created an “ongoing nightmare of debt and despair” for students.
Corinthian had 74,000 students as of March 2014. The CFPB said the school encouraged students to take out 15% interest rate loans to pay tuition that ranged from $33,000 to $75,000; forced students to pay back the loans while in school, an unusual practice; and “shamed” some by pulling them out of class if they were behind on payments. The Bureau’s lawsuit also alleged that the company advertised “bogus job prospects and career services,” and engaged in illegal debt collection tactics.
The CFPB estimated that 130,000 private student loans were initiated by Corinthian students from July 2011 to last year, with an outstanding balance of $569 million. Meanwhile, 60% of those loans landed in default within three years.
Earlier this year, when some of many of Corinthian’s Everest and WyoTech campuses were acquired by a private firm named ECMC Group, the CFPB negotiated $480 million worth of debt relief for Corinthian borrowers. ECMC also agreed to stop lawsuits and not engage in improper debt collection tactics.
Still, many students still have substantial balances on loans associated with their time at Corinthian. The CFPB posted a page with detailed information for current and former students.
“Today’s ruling marks the end of our litigation against a company that severely harmed tens of thousands of students, turning dreams of higher education into a nightmare,” Cordray said. “We all have much more work to do before current and past students who were hurt by Corinthian’s illegal practices can be made whole. We remain deeply concerned about risks facing student borrowers in the for-profit space and will continue to be vigilant in rooting out harmful practices.”
More on Student Loans:
- How Student Loans Can Impact Your Credit
- Can You Get Your Student Loans Forgiven?
- A Credit Guide for College Graduates