Federal regulators won an important battle in the war against predatory for-profit colleges this week when a federal judge in Illinois entered a $531 million judgment against the now bankrupt Corinthian Colleges chain, finding that the company deceived students about future career opportunities and violated unfair and deceptive practice prohibitions.
The award came after Corinthian filed for bankruptcy and stopped defending itself in the lawsuit filed by the Consumer Financial Protection Bureau last year.
It’s unlikely that students will see any money from the company as a result, but the judgment may allow them to seek forgiveness of loans received from the U.S. Department of Education.
As the Wall Street Journal reports:
The agency has already said it will forgive loans for up to 40,000 former Heald [California] students of who owe between $500 million and $600 million. The agency is considering requests by other former students of Corinthian schools. In total, 350,000 students owing roughly $3.5 billion could ultimately be eligible for forgiveness, officials have said.
Corinthian operated one of the largest for-profit college chains in the country, with more than 100 campuses and approximately 74,000 students.
In the lawsuit the Bureau had alleged that Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.
“For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair,” Director Richard Corday said at the time.
For more on the case and on the loan-to-value crisis for students at for-profit schools, read here.