Here is the attachment that with Jack's email
STATEMENT of CORINTHIAN COLLEGES, INC. CFPB COMPLAINT – 9/16/14
Corinthian Colleges strongly disputes the allegations in today’s complaint filed by the Consumer Financial Protection Bureau, which wrongly disparages the career services assistance that we offer our graduates and mischaracterizes both the purpose and practices of the “Genesis” lending program. Further, contrary to CFPB’s normal process, Corinthian has not had the opportunity to respond to many of the allegations in this complaint. As the lawsuit itself notes, on July 3, we entered into an agreement with the federal Department of Education which provides for an orderly transition of our schools. We are in the process of implementing the plan, which provides existing students with the opportunity to complete their educational programs with minimal disruption. Precipitous, unwarranted actions by state and federal regulators make this transition more difficult for existing students, graduates seeking employment and Corinthian employees.
The complaint ignores clear, easily obtainable evidence that thousands of Corinthian graduates are hired into permanent positions by large and small employers across the U.S. every year. Instead, it cites isolated incidents at Corinthian’s 97 U.S. campuses that violated company policy regarding job placement policies. CFPB is aware of these cases because Corinthian identified the issues, took strong action to rectify them and self-reported them to the appropriate regulators and accreditors. It is deeply misleading to ignore the actions by Corinthian that brought these issues to light.
We currently employ approximately one full-time career services staffer for every 100 students. This is a substantial investment which contrasts with the average community college ratio of one counselor for every 1,000 students. We strive to meet or exceed the placement standards set by our accreditation agencies, and have consistently phased out and closed programs when placement standards are not being met. We have a robust system for tracking and verifying our graduate placements.
The complaint also makes illogical and self-contradictory arguments regarding the “Genesis” loan program. The complaint fails to note that fewer than 40 percent of Corinthian’s students use the supplemental loan program. The average interest rate on these loans is 9.0 percent (well below market rates), and the average in-school repayment is $35 per month. We ask students to make payments while in school to help them develop the discipline and practice of repaying their federal and other loan obligations. These loans are offered only to students who have a gap between their educational costs and available financial aid from all other government and personal sources. Our pre-enrollment student disclosures related to the supplemental loan program are clear and extensive. For additional information on the supplemental student lending program, see the fact sheet below.
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Corinthian Colleges Inc. Third-Party Supplemental Student Lending Fact Sheet September 16, 2014
Corinthian is committed to providing open access to post-secondary education. Without loans to supplement federal and other financial aid, many students would be unable to pursue career education. • Historically, students relied on major private lenders, such as Sallie Mae, to supplement their federal financial aid. However, these lenders stopped extending loans to students at career colleges in the wake of the financial crisis of 2007-2008. • In response to tight credit markets, since 2008 Corinthian has arranged third-party supplemental financing through a third party. • Although the economy has improved, most private lenders have not resumed lending to Corinthian students. Eliminating third-party lending would deprive many students of the opportunity to pay for school, graduate, and build careers in their chosen fields.
Supplemental loans made to students are modest in size and have reasonable interest rates. • Fewer than 40 percent of Corinthian’s students decide to take out supplemental loans. • The average supplemental loan amount per borrower is $4,700 and the loans are offered only to students who have a gap between their educational costs and available financial aid from all other government and personal sources. • The average annual interest rate for a supplemental loan is 9.0 percent and the maximum rate is 9.9 percent. These interest rates have remained constant since late 2012, and they are well below market rates of 16% or higher for unsecured loans. • The average in-school payment for a supplemental loan is $35/month. We ask students to make payments while in school to help them develop the discipline and practice of repaying their federal and other loan obligations.
The federal student loan program lends to the same students who receive third-party supplemental loans, and on similar terms. • Supplemental loans are offered to students to cover any gap between the cost of tuition and all other sources of financial aid, including federal student aid. Therefore, the federal government lends to essentially all supplemental loan borrowers. In fact, the federal student loan program lends several times more to students than is lent to the same students under the supplemental loan program. • The supplemental loan program uses most of the same underwriting standards and risk-limiting criteria as used in the federal government’s student loan program, and for the same purpose—to ensure that students have the opportunity to invest in post-secondary education. Both lending programs are open access, but limit the amount students can borrow annually and do not lend to students that already have delinquent loans.
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Prior to signing a supplemental loan agreement, students are encouraged to explore their student loan options, and all material terms of the loans are clearly disclosed in enrollment and financial aid documents. • Students that need additional financing to pay for school are encouraged to pursue a variety of options. • Students that decide to apply for supplemental loans are clearly informed of all material terms – including the loan amount, possible purchase by the Company, interest rate, repayment schedule, and that interest-only payments are required while they are in school.
The performance of the supplemental loan program is a product of Corinthian’s commitment to open access. • Corinthian wants every student to have the opportunity to succeed, so it arranges through a third party to make funds available without regard to the student’s credit history, as does the federal government. A student’s credit worthiness is not a reliable predictor of success in school; a student who commits herself to a program is likely to succeed and pay back her student loans. Corinthian believes the tradeoff is worth the risk.
Corinthian devotes substantial resources to helping students comply with the terms of their financial aid. • To prevent defaults and encourage repayment, Corinthian provides free financial literacy instruction and extensive counseling regarding loan obligations. The Company also has a comprehensive default prevention program designed to help students understand and satisfy their obligations. This is a value-added service provided to all student borrowers (whether federal or private, and regardless of who owns the loan). • Students are required to make a small monthly payment on their supplemental loans while in school (typically $35/month), to help students learn good repayment habits and ultimately help them perform better on their student loans. • The supplemental loan program also offers forbearances to students experiencing hardship. Over 54,000 students have been granted forbearances since 2008.
Corinthian schools provide educational opportunity to underserved, low-income communities, and deliver good value to their students. • Many of Corinthian’s schools are located in low-income communities that other institutions do not serve. • Many students choose Corinthian schools over community colleges. According to the Company’s most recent student survey, approximately 40% of its students have previously attended community colleges. Many of these students found that these institutions did not serve their needs, either because of a lack of hands-on training, waiting lists for desired programs or classes, large class sizes, or a lack of adequate support from faculty and staff. • In contrast, Corinthian schools seek to provide practical, hands-on training, and the institutional support students need to succeed.
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