From piling it on
The Growth of Proprietary School Loans
And the Consequences for Students
(January 2011)....http://www.studentloanborrowerassistance.org/wp-content/uploads/2013/05/proprietary-schools-loans.pdf.....
"Corinthian Colleges also expanded institutional
lending considerably. Corinthian
operates Everest, WyoTech and Heald College.
Many analysts view Corinthian as one
of the most troubled of the for-profit higher
education companies.27 In November 2010,
Chief Executive Peter Waller resigned at the
request of the board of directors. The Wall
Street Journal reported that he received a $1.55
million lump sum severance payment.28
Corinthian students were heavy users
of private loans. In 2007, private loans represented
13%, of Corinthian’s total revenues,
with Sallie Mae providing about 90% of these
loans. 29 Sallie Mae notified the company in
2008 that it would no longer provide private
loans to its students.
In an August 2009 conference call, Corinthian
management referred to the company’s
internal lending program as the Genesis Discount
Lending Program. Corinthian described
Genesis as a company that specializes in
subprime credit. Genesis has described itself
as a company that serves the most credit-challenged
applicants.30 This program replaced the
prior institutional loan program called STAR.
Corinthian described a process of “ramping
up” internal lending throughout 2008
and 2009. In order to increase the amount of
loans funded, the company was focused on
decreasing the amount of time needed to fund
the loans. Among other actions, this involves
shortening the funding cycle so that more
loans can be funded.31 Corinthian lent about
$120 million in institutional loans for both
of the years ending June 30, 2009 and 2010.
It expected to lend about $150 million in FY
2010.32The Genesis program has some similarities
to previous Corinthian institutional loan
programs. Under the Genesis program, Corinthian
pays a discount to Genesis, the origination
and servicing provider, as a reserve
against future defaults. Corinthian records the
discount as a reduction to revenue. However,
unlike the previous private loan programs,
under the Genesis program, Corinthian has
both the right and an obligation to acquire
the related loans, except in very limited circumstances.
Corinthian bears the risks of collections.
Since initiating the program in 2008,
Corinthian says it has acquired all of the loans
that have been originated.33"