Corinthian Colleges Inc. comes under fire
U.S. consumer regulators were considering legal action against Corinthian Colleges Inc over issues related to student loans, the for-profit college company said on Monday.The U.S. Consumer Financial Protection Bureau’s enforcement office sent Corinthian a letter in December warning of the possible action, the company said in a filing with the U.S. Securities and Exchange Commission.
The consumer bureau had previously notified Corinthian that it was looking into education companies that regulators believe may have participated in “unlawful acts or practices relating to the advertising, marketing, or origination of private student loans,” according to the filing.
Corinthian’s shares fell 7 percent in extended trading after the filing. A spokesman for Corinthian declined to comment, as did a spokesman for the consumer bureau.
Congress created the consumer bureau as part of the 2010 Dodd-Frank law and gave it oversight of a wide range of consumer financial products, including student loans.
Consumer advocates argue that for-profit colleges load low-income students up with pricey loans but have poor track records of helping those students find jobs afterward.
California-based Corinthian says on its website that it is one of the largest for-profit education companies in the United States and Canada.
So far, the consumer bureau has not made public any enforcement actions against for-profit schools. The state of California sued Corinthian in October, claiming it misrepresented job placement rates.
Corinthian said in its SEC filing on Monday that it would send the consumer bureau a statement explaining why the company believes the bureau should not take legal action against it.
“The company…continues to believe that its acts and practices relating to student loans – financing that is essential to preserving our students’ access to post-secondary education — are lawful,” Corinthian said.
Corinthian’s shares were at $1.55 after the bell, down from the closing price of $1.67 on the Nasdaq on Monday.