A major for-profit education chain declared bankruptcy Monday, forcing graduates seeking relief from student loan debt to reconsider their legal options.
Santa Ana-based Corinthian Colleges, Inc., is accused of misleading students about its finances and job placement rates, and has faced lawsuits and regulatory pressure. Last year it agreed to sell a major portion of its holdings. The bankruptcy filing came one week after Corinthian shut down its remaining campuses, leaving some 16-thousand students enrolled in Everest and Heald Colleges with unfinished course work.
Graduates seeking debt relief contend they were induced to enroll with false promises of job placement opportunities.
"They promised us they had a network of employers ready to interview their students upon graduation," said graduate Tasha Courtright, who majored in business at the Ontario Everest campus.
Some of the job openings to which she was referred by the college's career counseling office came from postings on Craig's List, she said. In another case, she was sent to interview at a real estate office for what turned out to be a temporary two week position as a receptionist.
"I missed special events, I missed birthdays, I missed a lot of stuff because I thought I was bettering my life," said Courtright, who put her student loan debt at $41,000.
Students told NBC4 they were misled about how much debt they would need to take on.
Last fall, California Attorney General Kamala Harris filed a civil suit against the chain, which at one point had dozens of campuses across much of the nation and, including online enrollment, counted more than 100,000 students.
Attorneys with Public Counsel Monday were preparing to file a motion to enable former students to intervene in the Attorney General's suit when they received word of the Chapeter 11 bankruptcy filing.
Students are entitled to a voice in the legal proceedings, according to Public Counsel.
"They are the centerpiece of what is hte most massive fraud in the area of educationn in the history of this country," said Mark Rosenbaum, director of Public Counsel Opportunity Under Law.
"We are going to pursue this, in bankruptcy court or in superior court," said associate director Anne Richardson. "They can run but they can't hide."
The bankruptcy filing limits the recovery of assets or damages in proceedings outside the bankruptcy court. But forgiveness of the federal student loan debt could be granted by the federal government, Richardson said.
In its filing, Corinthian stated bankruptcy would help it "complete the orderly wind-down of its operations."
Calls to its Santa Ana corporate office and a public relations firm retained by Corinthian were not returned.