Aug. 25 (Bloomberg) -- Corinthian Colleges Inc., the for-profit college operator that’s being shut down, said a federal regulator curtailed its ability to sell off student loans, alleging violations of consumer laws.
Corinthian, based in Santa Ana, California, sold a portfolio of loans to an unspecified buyer for about $19 million on Aug. 20, it said today in a regulatory filing. The next day, company lawyers met with attorneys for the Consumer Financial Protection Bureau, which asserted the company had violated the Dodd-Frank Act and Fair Debt Collections Practices Act, the filing said.
As a condition to entering settlement talks, Corinthian must cease sales or transfers of private student loans, inform the CFPB of potential asset sales and give students more information about the possible sale or shutdown of its campuses. The company has until Aug. 29 to respond to the CFPB.
Corinthian, which served about 72,000 students as of last month when it agreed to a government plan to close or sell its 107 campuses, is facing allegations in multiple states of falsifying job placement and marketing data. In June, the Education Department imposed a 21-day waiting period for its access to student aid, creating a liquidity crisis at the company.
As a result of a change to the accounting treatment of the loans it sold and the price paid for them, Corinthian said said it’s required to take an impairment charge of about $55 million to $59 million on the assets.
Corinthian also said in the filing that its lenders agreed to let it sell certain equipment from its WyoTech automotive schools and the property of its Melbourne, Florida, campus. The company didn’t say whether it has received offers for any of its campuses.
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