Consumer Federation of California

For-profit Corinthian Colleges Inc. was sued by Massachusetts over claims it misrepresented job placement rates and pushed students into high-interest loans.

The school since 2009 “aggressively recruited and misled students by falsely promising high quality, successful training programs” while leaving them with “exorbitant student loan debt,” state Attorney General Martha Coakley said today in a statement.

Corinthian, based in Santa Ana, California, was sued in state court in Boston as state and federal regulators crack down on for-profit colleges with purportedly lower-than- advertised placement rates and students with heavy debt loads.

The U.S. Consumer Financial Protection Bureau in February sued ITT Educational Services Inc. (ESI), based in Carmel, Indiana, alleging that it engaged in predatory lending by encouraging students to borrow money they would probably struggle to repay.

Corinthian told prospective students that its programs had placement rates from 70 percent to 99 percent, when actual placement rates in certain programs were from 20 percent to 30 percent, Massachusetts said.

The state asked for a court order barring the school from making deceptive statements and compelling it to pay restitution and penalties.

A Corinthian Colleges spokesman, Kent Jenkins, said the lawsuit “disregards substantial, independent evidence that our two schools in Massachusetts have a strong record of offering students a quality education and treating them honestly and fairly.”

The attorney general’s office “attempted to manufacture and retroactively impose,” job placement criteria as part of a three-year probe, he said by e-mail.

Tags: For-Profit Colleges, Student Loans