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Corinthian College fined $30 million for overstating job placement rates for graduates

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NEW YORK (CNNMoney) — The for-profit Corinthian College network has been fined $30 million by the Department of Education for overstating job placement rates for graduates.

The department found that the Corinthian-owned Heald College, based in San Francisco, misrepresented employment numbers to prospective students and the government.

“Instead of providing clear and accurate information to help students choose which college to attend, Corinthian violated students’ and taxpayers’ trust,” said DOE Under Secretary Ted Mitchell in a statement.

An investigation found that Heald College paid temp agencies to hire its graduates to work on its own campuses for as little time as two days so that it could count those students as employed. Heald failed to disclose that its placement rates counted those students whose employment began prior to graduation, and in some cases prior to even enrolling at the school, according to the Department of Education.

It also says Heald College sometimes inaccurately reported on graduates who found a job related to their field of study. In one example, it counted a 2011 accounting graduate who was working at a Taco Bell.

A Corinthian spokesman called the allegations “highly questionable” and “unsubstantiated.”

“Heald has a well-documented track record of providing quality education and significant value to its students for more than 150 years—and should be allowed to continue to do so,” he said.

Heald College was acquired by Corinthian in 2010 and currently has 9,000 students and employs 1,000 faculty and staff.

Corinthian’s network of for-profit schools once included 100 campuses across the country, but the government has forced it to close or sell off its locations over concerns about its high-interest loans and misleading information. A majority of its schools have been sold to the nonprofit Zenith Education Group, but that sale didn’t include the Heald campus.

Corinthian is in hot water for allegedly preying on low-income people with high-interest loans and is facing lawsuits brought by the Consumer Financial Protection Bureau and attorneys general in California, Massachusetts and Wisconsin.

In February, the government struck a deal with the company acquiring some of Corinthian’s campuses, forcing it to wipe out $480 million in debt. Ongoing lawsuits could increase that amount.

More than 100 former students are refusing to pay off loans they used in order to attend the network of colleges owned by Corinthian, and nine state attorneys general have asked the government to cancel their debt.

The fine further threatens Heald’s future by imposing an additional financial burden on prospective buyers, a Corinthian spokesman said.

It has 14 days to respond to the Department of Education’s decision. At that time, the agency could force the school to stop enrolling any more students and prepare to help current students either finish their degree or transfer elsewhere.

Once a cash cow industry, for-profit education companies have struggled to overcome criticism of the quality of its education and the costs. The University of Phoenix has lost more than half of its students in the past five years.

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