Corinthian Colleges Files for Bankruptcy
Corinthian Colleges, until recently one of the country’s largest for-profit higher education chains, filed for chapter 11 bankruptcy this Monday, one week after shutting down its remaining campuses.
This marks the climax of the collapse of the company that was once praised on Wall Street for its profitable model of offering degrees to low-income students who took out heavy student loans from the government to pay the cost of their tuition. However, allegations accumulated around the company, exposing lies about the success of its programs and the predatory methods used to push loans on its students, ultimately leading to a slew of government lawsuits and a loss of access to its primary source of funding, the federal government.
Corinthian Colleges, which operated Everest, Heald, and WyoTech colleges, spend much of this past year winding down its operations due to the Department of Education cutting off its access to federal aid due to allegations of falsified job placement claims and graduation rates. The department allotted Corinthian $16 million in federal funding to keep it alive long enough to sell or close its 107 campuses around the country.
In November, one of the largest debt collectors employed by the Department of Education, ECMC Group, bought more than half of Corinthian’s campuses for $24 million. Corinthian was having trouble selling off the remaining schools amid growing government lawsuits and a large federal fine.
Just a few weeks ago, Corinthian was hit with a $30 million fine for misrepresenting its job placement rates; an allegation the school denies. The department discovered 947 cases of false placement rates given to students. Heald College was found to be paying temp agencies to hire its graduates to work as few as two days, so they could add those students to their job placement statistics.
Corinthian is also being sued by several state attorneys general for its deceptive marketing practices. Corinthian is also entangled in a $500 million lawsuit with the Consumer Financial Protection Bureau, which accused the company of intentionally steering its students into high cost loans.
Due to the closure of these schools and the pending lawsuits against them, students currently have the option for loan forgiveness if they meet certain qualifications. Call us today to find out if you are eligible.