The Consumer Financial Protection Bureau filed a complaint and proposed settlement on Thursday in the U.S. District Court in Oregon against Aequitas Capital Management Inc. and related entities for aiding the Corinthian Colleges’ predatory lending scheme.
The CFPB alleges that Aequitas enabled the now defunct Corinthian to make high-cost private loans to Corinthian students to make it appear that the school was pulling in enough outside revenue to meet the requirements for receiving federal student aid money.
The risky loans, CFPB maintains, saddled students with high-priced debt that both Aequitas and Corinthian knew students could not afford.
The CFPB’s settlement asks the court to allow close to 41,000 Corinthian students to be eligible for approximately $183.3 million in loan forgiveness and reduction.
In collaboration with the CFPB, several state attorneys general have also reached proposed settlements with Aequitas.
“Tens of thousands of Corinthian students were harmed by the predatory lending scheme funded by Aequitas, turning dreams of higher education into a nightmare,” said CFPB Director Richard Cordray, in a statement. “Today’s action marks another step by the Bureau to bring justice and relief to the borrowers still saddled with expensive student loan debt. We will continue to address the illegal lending practices of for-profit colleges and those who enable them.”