Your BBB® is pleased to bring good news to college student borrowers of high-cost private student loans from Corinthian College. The Consumer Financial Protection Bureau (CFPB) and the Department of Education announced the news in a February 3, 2015 News Release.
According to the release, Corinthian Colleges, Inc. was one of the largest for-profit college companies in the U.S., operating more than 100 schools. The CFPB sued Corinthian Colleges, Inc. in September 2014 for “luring tens of thousands of students to take out private loans, known as Genesis loans, to cover expensive tuition costs by advertising bogus job prospects and career services.”
The CFPB alleged in the lawsuit that from July 2011 through March2014, students took out nearly 130,000 private student loans to pay Corinthian’s tuition and fees. The total outstanding balance of these loans was in excess of $568.7 million. Further allegations include misrepresenting its graduates’ career opportunities, falsely inflating its job placement statistics to induce students to enroll and to maintain its accreditation by defining a “placement” as any job that lasted one day, with the promise of a second day, represented to its students that the Genesis loans were made by an independent third-party entity and that Corinthian did not have a financial interest in the loans. However, at different times during the period July 21, 2011 to the present, the lawsuit alleges, Corinthian was obligated to purchase all such loans immediately after origination, or all such loans on which a payment is more than 90 days past due and used “aggressive collection efforts.”
According to the News Release, the Educational Credit Management Corporation (ECMC) which purchased a number of Corinthian schools sought a release from the CFPB from its “potential liability for Corinthian’s alleged illegal activity.” The News Release outlines the agreement ECMC reached with CFPB.
In the agreement, ECMC agreed to
*provide more than $480 million in debt relief to Corinthian victims,
*not offer private student loan programs for a period of seven years,
*halt lawsuits and threats and improper data collection practices,
*remove negative information from student borrowers’ credit reports, and
*implement strong, new consumer protections.
To see if you are eligible for debt relief from ECMC, the CFPB has published a consumer bulletin with information for current and former Corinthian students. The CFPB’s lawsuit against Corinthian remains ongoing.
For more information you can trust, visit bbb.org/evansville.
While the BBB endeavors to provide accurate information to the public, changes in the law, facts or circumstances may have occurred since the foregoing was posted. The BBB recommends doing independent research and consulting professional advisors concerning a particular situation.