Twenty years after opening its doors, Corinthian Colleges has officially gone bust.
The for-profit education company filed for Chapter 11 protection Monday.
The filing is not a surprise. It comes one week after Corinthian abruptly shut down its remaining 28 campuses, where some 16,000 students were enrolled.
Corinthian has been under fire for years from federal regulators and former students for alleged predatory lending practices, preying on low-income students, and falsely inflating job placement numbers.
Just last month, the Department of Education fined Corinthian $30 million for overstating job placement rates for graduates.
Given these developments, it’s not surprising that Corinthian’s bankruptcy documents show that the company had $143 million in debt, while listing just $19 million.
Founded in 1995, Corinthian’s network of for-profit schools once included 100 campuses across the country, where about 74,000 students were enrolled. But since last July, the Department of Education has forced the company to close or sell off its locations over concerns about its high-interest loans and misleading information.
Even before the shutdown plan was announced, Corinthian had already spent years in court defending itself against charges it had allegedly preyed on low-income people with expensive loans. Over the past year, things haven’t gotten better for the embattled education company, which faces a slew of lawsuits brought by attorneys general in nine states, including California, Massachusetts and Wisconsin.
Corinthian’s tuition was expensive – a bachelor’s degree could cost as much as $75,000. Federal loans won’t cover such high tuition, so students often had to take out private loans. The Consumer Financial Protection Bureau alleges that Corinthian kept tuition high in order to force students to borrow from the college at higher rates.
The Corinthian loans came with origination fees of 6% and interest rates of around 15%, as of 2011. That’s much higher than the 3% and 7% interest on federal student loans.
Corinthian also allegedly used illegal and abusive tactics to collect on that money while students were still enrolled in school.
Students who were roped into high interest loans have seen some relief. In February, the company announced that students would get $480 million in loan forgiveness under a deal orchestrated by federal regulators.
Under the deal, Corinthian would sell 50 campuses to a nonprofit called the ECMC Group.
Students will immediately see a 40% reduction in the amount they owe on these high-cost, private loans provided by Corinthian.
Meanwhile, a group of 100 former Corinthian students have stopped paying their loans and are pushing to have their debts, including federal loans, completely forgiven. The so-called Corinthian 100 say they didn’t get the quality education they were promised and that their very expensive degrees are worthless.
The Debt Collective, which represents the students, said Friday that it would not attend a previously scheduled meeting with Education Secretary Arne Duncan. The group says the Education Department wants to forgive student loans on a case-by-case basis, as opposed to doing so collectively.
“The only reason the Department favors an individualized process is that it allows them to prevent as many students as possible from getting relief,” the Debt Collective said in a statement.
— CNNMoney’s Katherine Lobosco and Sophia Yan contributed to this report.