Durbin: CFPB Lawsuit Should Be The End Of The Road For Corinthian Colleges

Senator says Department of Education should follow lead of states like Illinois that have banned new enrollments at Everest, Heald and WyoTech schools

[WASHINGTON, D.C.] - U.S. Senator Dick Durbin (D-IL) - author of legislation that would improve coordination between federal agencies that oversee the for-profit college industry - once again called on the Department of Education to prohibit new enrollments at Corinthian Colleges, Inc. institutions as several states, including Illinois, have already done.

Earlier today, the Consumer Financial Protection Bureau (CFPB) sued Corinthian Colleges, Inc. for its illegal predatory lending scheme alleging “a pervasive culture across the Everest, Heald, and WyoTech schools that allowed employees to routinely deceive and illegally harass private student loan borrowers.” 

“While I cannot understand why the Department of Education has continued to allow this for-profit college to enroll new students and continue to access federal student aid dollars, the action taken by the CFPB today should mark the end of the road for Corinthian,” said Durbin.  “With its stock now trading at mere pennies, it seems the only investor left in this failed company is the federal government.  That has to end.  Students beware: Everest, Heald and WyoTech schools can’t deliver on their promises.”

CFPB alleges in its suit that Corinthian lured tens of thousands of students to take out private loans with interest rates as high as 15% by advertising bogus job prospects and sham career services.  Corinthian then used illegal debt collection practices to bully students into repaying while they were still in school, employing tactics like pulling students out of class to shame them into repaying, blocking access to academic resources until payments were made, or withholding diplomas.  CFPB is seeking $500 million in damages from the company.


Earlier this year, Durbin joined U.S. Senator Tom Harkin (D-IA) and U.S. Representative Elijah Cummings (D-MD) in introducing the Proprietary Education Oversight Coordination Improvement Act which, through the establishment of an interagency oversight committee, aims to improve enforcement of federal laws and regulations while increasing accountability of for-profit colleges to students and taxpayers. 

“For many years, for-profit schools were allowed to operate one step ahead of the law.  As the number of investigations by federal, state and local agencies increase, however, I think we are starting to turn the corner,” said Durbin. “With so many agencies involved in these oversight efforts it is important that they are effectively working together to hold these schools accountable to taxpayers who often subsidizes up to 90% of their operations and to students who ultimately are the victims of their schemes.  Better coordination will help regulators prevent the ongoing fraudulent and abusive practices of this industry that rakes in more than $25 billion in federal dollars every year.”


After failing to provide required data to the Department of Education about its practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance, Corinthian has now agreed to sell or close its campuses across the country. This places the company’s 70,000 current students at risk, but also presents the opportunity to find better educational opportunities for these students.  The for-profit college is currently under investigation by 20 states, the Consumer Financial Protection Bureau, the U.S. Department of Justice, and the Securities and Exchange Commission.


On June 26, Durbin joined eleven U.S. Senators in calling on the Secretary of Education Arne Duncan to protect students while continuing to hold Corinthian Colleges, Inc. accountable, including immediately prohibiting them from enrolling any new students.  In addition, the Senators asked the Department of Education to answer a series of questions related to the protection of students and taxpayer funding. 


In response to a December 16 investigation in the Huffington Post, Durbin sent a letter to the Secretary of Education, Arne Duncan, asking him to investigate Corinthian Colleges, Inc. and their manipulative marketing practices which included a subsidy program for employers to hire graduates temporarily and outright lying by the company through their advertisement of numbers substantially higher than actual job placement rates.

After that letter, the Department requested information from Corinthian related to their job placement rates, information they have yet to provide, and denied the company’s new program applications.  Durbin also called on the Accrediting Commission of Career Schools and Colleges – Corinthian Colleges, Inc.’s accreditor – to take action.