Federal Judge Rules Against Corinthian in Predatory Lending Case

A federal judge this week ruled that the defunct Corinthian Colleges engaged in "unfair" and "deceptive" practices in its private student lending program and ordered the company to pay roughly $530 million in restitution to students, Inside Higher Ed reported.

Judge Gary Feinerman of the U.S. District Court for the Northern District of Illinois on Tuesday ruled that Corinthian deceived students by convincing them to take out private student loans based on misleading and false information about their job prospects upon completing the for-profit college's programs. He also found that the company illegally collected private student loan debt.

The Consumer Financial Protection Bureau filed the lawsuit in September 2014, after stricter oversight by the U.S. Education Department prompted the company to shut its doors and agree to sell a majority of its campuses. Corinthian filed for bankruptcy in May. Former students petitioned the federal government this year for easier access to refunds for tuition paid at Corinthian campuses, reported The Chronicle of Higher Education.

While it is uncertain whether the defunct company has sufficient assets to pay the ordered restitutions, the legal finding against Corinthian may help boost the case of former students who are asking the Education Department to cancel their loans.

"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," said the CFPB Director Richard Cordray in a written statement. "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."


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