MASSACHUSETTS SUES CORINTHIAN COLLEGES FOR ALLEGED UNFAIR LOANS

(The following is a reformatted version of a press release
issued by the Office of Massachusetts Attorney General Martha
Coakley and received via electronic mail. The release was
confirmed by the sender.) 
April 3, 2014 
FOR-PROFIT SCHOOL SUED FOR DECEIVING STUDENTS AND FACILITATING
UNFAIR LOANS 
AG Alleges School Used Aggressive Deceptive Marketing Tactics to
Increase Enrollments, Secure Federal Student Loan Funds and Hike
Profits; Restitution Sought for Affected Students 
BOSTON - A for-profit school operating in the Boston area has
been sued over allegations that it misrepresented its training
programs and job placement rates in order to increase profits,
and pushed students into high-interest subprime loans, leaving
many students without employment and unable to repay their debt,
Attorney General Martha Coakley announced today. 
The complaint, filed today in Suffolk Superior Court, alleges
that since 2009, Corinthian Colleges, Inc. and Corinthian
Schools, Inc., which operate Everest Institute, have misled
Massachusetts students in order to increase profits for
shareholders at the expense of students and taxpayers. 
 “We allege that this for-profit school aggressively recruited
and misled students by falsely promising high quality,
successful training programs, and instead left them with
exorbitant student loan debt and without proper training or a
well-paying career,” AG Coakley said. “Our office will continue
to investigate the for-profit school industry as we continue to
see students and taxpayers suffer the consequences of high
default rates, inadequate training, and mounting debt.” 
The complaint alleges that Corinthian, which subsists largely on
taxpayer-backed loans to students, focused intently on
recruiting new students regardless of their qualifications or
whether the students were likely to complete or benefit from
Corinthian’s programs. This includes using deceptive marketing
and high pressure enrollment tactics, steering some students to
additional private subprime loans, as well as providing poor
instruction. 
The complaint addresses diploma programs in dental assistant,
medical administrative assistant, medical assistant, medical
insurance billing and coding, and massage therapy, offered at
Corinthian’s Everest Institute locations in Brighton and
Chelsea. As of March 2013, Corinthian operated 97 campuses in
the United States and 16 in Canada, with a total enrollment of
87,776 students. 
The complaint against Corinthian seeks restitution to affected
students, civil penalties and fees, along with injunctive relief
to prohibit future deceptive practices. 
DECEPTIVE MARKETING: 
Corinthian allegedly told prospective students that a very high
percentage of its Massachusetts students obtain well-paying
employment in their fields of study, but the complaint alleges
few students in fact obtain jobs in their fields of study. 
Corinthian also allegedly told prospective students that its
programs had placement rates ranging from 70 to 99 percent, when
actual placement rates in certain programs were between 20 and
30 percent. Additionally, Corinthian allegedly hid that it had
failed its accreditor’s standards for placement from 2008 to
2011, and allegedly counted temporary jobs lasting longer than
one day as a placement, including students who assisted at a
two-day health fair. One student even reported that in order to
receive her diploma, she was forced to falsely fill out a form
stating that she had obtained a job. 
According to the complaint, Corinthian deceived students by
falsely promising prospective students they were “guaranteed”
jobs after graduating. Corinthian, on its Everest website, has
long represented “we help our graduates find jobs after
graduation.” In fact, the complaint alleges that Everest
provides little or no help to students looking for jobs. One
student noted “my problem was with the job placement department.
Every time I called I would leave a message never to have it
returned.” 
Corinthian also allegedly misled students about the salaries
they could expect after attending the school. One student in the
medical assistant program was reportedly told the salaries of
graduates start at $17 or $18 per hour, while a second “was told
[that the] pay rate was $21-$22.”  The actual average wage for
entry-level medical assistants in Massachusetts is significantly
less (approximately $14 per hour). 
HIGH PRESSURE ENROLLMENT TACTICS: 
Corinthian allegedly engaged in harassing and deceptive
enrollment tactics, which included having recruiting agents make
hundreds of calls per week to prospective students, often
numerous times per day. Corinthian’s recruiters allegedly made a
litany of promises in order to get consumers through the door.
As one student noted “[the recruiter] called me every day at any
time during the day or night to tell me that car[eer] will
change my life. Guess what? It didn’t! I’m working at my city
grocery store.” 
Corinthian’s recruitment tactics also involved creating a false
sense of urgency to pressure prospective students to enroll
immediately. Corinthian sent mailings to prospective students
stating that there was “LIMITED SPACE AVAILABLE” and that
students should “call so we can reserve a pending spot for you.”
In reality, Corinthian’s Massachusetts locations did not turn
students away because of limited space, and classes started once
- sometimes twice - per month. 
Corinthian’s recruiters allegedly enrolled students knowing that
they would be unable to obtain employment in their fields of
study due to criminal backgrounds, inability to speak or
understand English, or lack of high school diplomas. One student
even reported that Corinthian provided her with correct answers
to ensure that she passed a test intended to measure her ability
to benefit from the program. Corinthian also allegedly told
prospective Massachusetts students that Everest credits transfer
to any accredited school, when in fact few schools accept
credits from Corinthian’s Everest campuses. 
According to the complaint, in some classes students received
little instruction of any kind. As one student noted, “My
instructor did not teach us. This was basically a hangout place
for people.” Another student stated, “A typical day consisted of
discussing a lecture assignment:  we would answer among
ourselves… the instructor just sitting there in her chair doing
nothing.” Although Corinthian advertised its programs as
providing “high quality private education” with “professional
level standards for conduct and behavior,” students reported
that classes were reportedly subject to constant disruptions and
teachers and administrators made no effort or failed to maintain
control of the environment. 
PRIVATE SUBPRIME LOANS AND HIGH COST OF PROGRAMS: 
Although most of the debt that students incurred attending
Corinthian’s schools comprised federal loans, Corinthian also
created, guaranteed, and steered students into a private
subprime loan program with interest rates as high as 18 percent.
According to the complaint, by January 2013, 70 percent of
students who obtained these private loans in 2008 and 2009 had
defaulted. The complaint alleges that Corinthian knew or should
have known generally that Massachusetts students were unable to
repay these loans in accordance with their terms, and that such
loans were structurally unfair. The complaint alleges that
Corinthian created this subprime loan program in order to
satisfy the federal requirements that 10 percent of student
funding come from private sources. 
Corinthian’s tuition prices are among the highest among for-profit schools, according to the complaint. Currently, while
Corinthian’s diploma programs typically cost between $16,000 and
$19,000, Massachusetts community colleges offer similar programs
for less than half this price. Corinthian’s steep costs are
unaffordable for many graduates, especially those unable to
obtain employment despite Corinthian’s promises. 
Today’s matter is being handled by Assistant Attorney General
Peter Leight, Division Chief Glenn Kaplan, Mathematician Burt
Feinberg, Legal Analyst Jennifer Snow, and paralegal Erica
Harmon, all of the Attorney General’s Insurance & Financial
Services Division. 
AG COAKLEY’S INVESTIGATION OF FOR-PROFIT SCHOOL INDUSTRY: 
Today’s action is a result of AG Coakley’s comprehensive and
ongoing investigation into the for-profit education industry. 
In January 2014, AG Coakley held hearings on her proposed
amendments to existing consumer protection regulations to better
protect students from potentially unfair or deceptive practices. 
In November 2013, the AG’s Office filed a lawsuit against
American Career Institute (ACI), alleging the school falsified
student signatures, enrollment records, attendance, and grades
to receive government-funded student loan proceeds, and failed
to provide students the course material and training for which
they incurred tens of thousands of dollars in debt. 
In October 2013, AG Coakley reached a $425,000 settlement to
reimburse former students of Sullivan & Cogliano Training
Centers, Inc., a Brockton-based for-profit career school, for
allegedly misrepresenting job placement numbers and making other
misleading statements about its medical field training programs.
The settlement resolved the AG’s lawsuit filed in April 2013. 
In April 2013, AG Coakley launched Eliminate Deceptive Education
Business Tactics (D.E.B.T.), an extensive consumer protection
campaign with free educational trainings across the state and a
new website offering resources for consumers related to for-profit schools. To inquire about a free training or to obtain
educational materials, consumers may email
AGOEliminateDebt@state.ma.us. 
In March 2013, AG Coakley signaled her support for proposed
federal legislation which would stop for-profit schools from
spending taxpayer money on marketing. 
In June 2012, AG Coakley obtained $225,000 for the state in a
multistate settlement with QuinStreet which resulted in the
deceptive for-profit marketing website GIBill.com being taken
down and handed over to the U.S. Department of Veterans Affairs. 
MEDIA CONTACT:
Jillian Fennimore
Brad Puffer
(617) 727-2543 
(bjh) NY 
#<873920.660640.3.12.0.0.76>#
 
 
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