Company which profited off predatory lending schemes—and government assistance—to displace additional 16,000 students.
Student loan debt is now the largest form of unsecured debt in the country today, surpassing credit cards and auto loans. (Photo/SMBCollege via Flickr)
Corinthian Colleges, the for-profit education system that has come under fire for its predatory student loan schemes, said Sunday it would shut down all of its 28 remaining campuses, roughly two weeks after the U.S. Department of Education announced it would fine the institution $30 million for misrepresentation regarding job placement rates.
In a statement Sunday, Corinthian said it would close Heald College campuses in California, Hawaii, and Oregon, as well as Everest and WyoTec campuses in California, Arizona, and New York. At its peak, the California-based company ran more than 120 colleges across the country with more than 110,000 students.
This final shutdown will displace about 16,000 students.
“Students seeking better life options should be assured that their investments will pay off in increased knowledge, skills, and opportunity,” wrote Education Undersecretary Ted Mitchell in a blog post on Sunday following Corinthian’s announcement. “What these students have experienced is unacceptable.”
The company was first hit with a spate of lawsuits in September 2014 over its lending schemes and collection tactics, which charged that Corinthian preyed on low-income students by falsely advertising an education with their schools as an avenue to a stable career path.
Students whose campuses are closing may be eligible for closed-school loan discharges, Mitchell added on Sunday. “We will do everything we can to ensure that Corinthian makes good on its obligations to students and taxpayers to the extent possible. In addition, we encourage Corinthian students to pursue debt relief with their state,” Mitchell wrote.
However, some say that the Department of Education has yet to come through on those promises. As the National Consumer Law Center pointed out in February, the government gave funds to keep Corinthian afloat before it filed for bankruptcy, but gave no such help to the tens of thousands of students who were left without a degree and saddled with debt.
“There’s widespread evidence they’ve engaged in years and years of deceiving students and taxpayers,” NCLC attorney Robyn Smith told the Boston Globe at the time. “We’re not seeing any relief for the students who’ve suffered the consequences.”
According to the company’s filings, the schools generated $1.2 billion in government loans in its final year.
Taking a stand against the company’s schemes, a number of recent graduates, dubbed the Corinthian 15, launched a nationwide debt strike in February with the help of anti-student debt collective Rolling Jubilee.
One of the Corinthian 15, former Everest student Latonya Suggs, said at the time, “Not only did the school fail me, but the Department of Education failed me because it is their responsibility to make sure that these schools provide a quality education at an affordable cost at a scam-free school.”