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A California judge ordered a now-defunct for-profit college chain to pay more than $1 billion Wednesday over claims the company misled students and investors.
The judgment is the latest step in a suit filed against Corinthian Colleges and its California subsidiaries by California Attorney General Kamala Harris in 2013. In the more than 20 page document , Judge Curtis Karnow ordered the school to pay $820 million to affected students and more than $350 million in civil penalties.
It’s unlikely former students will get that money from Corinthian’s pockets, though. The company filed for bankruptcy in May and listed assets of $19.2 million. A judge later approved a plan for the company to liquidate its assets.
But the judgment could help students in another way, said Ben Miller, the senior director for postsecondary education at the Center for American Progress, a left-leaning think tank. It could serve as evidence of Corinthian’s wrongdoings for former students who are applying to the federal government to have their loans forgiven because they believe the school violated state law, he said.
“It would seem like if there are programs within California that didn’t have sufficient evidence for borrower discharge yet, I would think this judgment gives what’s necessary,” he said.
In a statement , Harris said her office will do “everything in our power” to make sure former students get access to all available relief.
The bankruptcy came after years of accusations from Harris and others that Corinthian used inflated graduation and job placement rates to lure students. The judgment filed Wednesday makes reference to many of these claims as well as others. Corinthian-affiliated schools in California ran millions of online and mobile ads advertising ultrasound, X-ray, radiology and dialysis technician programs even though they didn’t offer any of those programs at the school, according to court documents.
The company also misrepresented its affiliation with the U.S. military by including various military seals on its mailings, the documents say. In addition, school representatives pulled students out of class when they were behind on their private loans issued through the school to get them to pay up, the filing states.
Other documents filed by Harris’s office as part of the suit last week and flagged by news site ProPublica accused the school of recruiting homeless students and targeting students with low self-esteem for its programs.
Attorneys for Corinthian didn’t appear at a hearing in the case earlier this week, according to court documents. Evan Borges, a former lawyer for the company, said Corinthian “ceased to exist back in September,” a fact that his firm advised the court of. The firm also filed motions with the court to withdraw as the company’s counsel.
The school’s collapse last year drew attention to the plight of students who took on debt to attend college based on misleading promises from their schools. The Department of Education expanded options for debt relief for certain groups of former Corinthian students last year. Now, the Department is in the midst of a rule making process to clarify when and how to forgive the loans of students who accuse their schools of violating state laws when recruiting them.
“(The judgment) is yet another admission that this is a deeply flawed company and the fact that it’s not around to pay this anymore stresses the importance of upfront protections for students,” Miller said.