Corinthian Colleges Goes Bust; Government Forgives Student Loans

For profit Corinthian Colleges — AKA Heald, Everest, and Wyotech vocational colleges — filed for bankruptcy, leaving 100 colleges and 16,000 students in the lurch.

 With just one day’s notice, Heald College campuses closed. Can you imagine going to a college that closes its doors on a moment’s notice? Unfortunately, 40,000 students don’t have to imagine it, because it happened to them.

Corinthian has been in hot water for a while now – in September, the Consumer Financial Protection Bureau sued them, accusing the chain of predatory conduct and lending abuses. “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,” said Richard Cordray, the consumer organization’s director. 

 In April, the Education Department fined Corinthian $30 million dollars for false advertising — 947 misrepresentations of placement rates for college graduates. In May, Corinthian had $143 million in debt and less that $20 million in assets. But its chairman, Jack D. Massimino, received a compensation package worth more than $3 million in 2013.  

Amusingly, Corinthian’s mission statement includes the following: “We serve our students and operate our schools in keeping with our core values, including integrity, service, excellence and accountability” (emphasis mine).

The good news is that the government has stepped in and will forgive the student loans of 40,000 eligible Corinthian students.  

[Source]