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Instructor: School Encouraged Teachers to Pass Failing Students

Anonymous insider says Corinthian Colleges was more interested in collecting students' federal loan money

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    NEWSLETTERS

    10/6/2014: Anonymous insider says Corinthian Colleges was more interested in collecting students' federal loan money. NBC 5's Lisa Parker reports. (Published Monday, Oct. 6, 2014)

    With campuses dotting the Chicago suburbs, Everest College is no stranger to controversy. As NBC 5 Investigates reported in August, its for-profit parent company, Corinthian Colleges, fell into disfavor with federal regulators last year amidst allegations it rigged grades, lied to prospective students about job placement rates, and encouraged irresponsible lending practices.

    An insider, who spoke with NBC 5 Investigates on the condition of anonymity, said the company cared more about money than the education of its students. The instructor said teachers were routinely encouraged to pass failing students, so the company would still receive the student's federal loan money.

    "They want us, and this is coming from the director of education at every campus, to push them through, pass them," the instructor said. "Give them something easy so they can pass ... The students are just a number. They're a dollar sign on their forehead."

    Corinthian officials dispute the allegations by the instructor, but now face similar accusations from a much higher source -- the federal Consumer Financial Protection Bureau. The agency's lawsuit echoes what insiders told NBC 5 Investigates, and accuses the company of leading students into predatory loans, in which the company had a direct interest.

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    8/7/2014: Everest College instructor says school was involved in deceptive practices. Lisa Parker reports for NBC 5 Investigates.
    (Published Thursday, Aug. 7, 2014)

    The lawsuit alleges 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 is accused of then using illegal debt collection tactics to strong-arm students into paying back those loans while still in school. The CFPB seeks to halt these practices and is requesting the court to grant relief to the students who collectively have taken out more than $500 million in private student loans.

    "For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair," said CFPB Director Richard Corday. "We believe Corinthian lured consumers into predatory loans by lying about their future job prospects, and then used illegal debt collection tactics to strong-arm students at school. We want to put an end to these predatory practices and get relief for the students who are bearing the weight of more than half a billion dollars in Corinthian's private student loans."

    A spokesperson for Corinthian issued the following statement to NBC 5 Investigates:

    "Corinthian Colleges strongly disputes the allegations in the complaint filed by the Consumer Financial Protection Bureau, which wrongly disparages the career services assistance that we offer our graduates and mischaracterizes both the purpose and practices of the "Genesis" lending program. Further, contrary to CFPB's normal process, Corinthian has not had the opportunity to respond to many of the allegations in this complaint.

    As the lawsuit itself notes, on July 3, we entered into an agreement with the U.S Department of Education that provides for an orderly transition of our schools. We are in the process of implementing the plan, which provides current students with the opportunity to complete their educational programs with minimal disruption. Precipitous, unwarranted actions by state and federal regulators make this transition more difficult for students, graduates seeking employment and Corinthian employees.

    The complaint ignores clear, easily-obtainable evidence that thousands of Corinthian graduates are hired into permanent positions by large and small employers across the U.S. every year. Instead, it cites isolated incidents at Corinthian's 97 U.S. campuses that violated company policy regarding job placement policies. CFPB is aware of these cases because Corinthian identified the issues, took strong action to rectify them and self-reported them to the appropriate regulators and accreditors. It is deeply misleading to ignore the actions by Corinthian that brought these issues to light.

    We currently employ approximately one full-time career services staffer for every 100 students. This is a substantial investment which contrasts with the average community college ratio of one counselor for every 1,000 students. We strive to meet or exceed the placement standards set by our accreditation agencies, and have consistently phased out and closed programs when placement standards are not being met. We have a robust system for tracking and verifying our graduate placements.

    The complaint also makes illogical and self-contradictory arguments regarding the "Genesis" loan program. The complaint fails to note that fewer than 40 percent of Corinthian's students use the supplemental loan program. The average interest rate on these loans is 9.0 percent (well below market rates), and the average in-school repayment is $35 per month. We ask students to make payments while in school to help them develop the discipline and practice of repaying their federal and other loan obligations. These loans are offered only to students who have a gap between their educational costs and available financial aid from all other government and personal sources. Our pre-enrollment student disclosures related to the supplemental loan program are clear and extensive."