This story appeared in Bank Digest.
The Consumer Financial Protection Bureau has filed a complaint and proposed settlement against private equity firm Aequitas Capital Management, Inc., and its related entities for allegedly aiding the Corinthian Colleges' predatory lending scheme by enabling Corinthian to make high-cost private loans to Corinthian students. Specifically, the Bureau alleges that Aequitas and Corinthian plotted to make it seem as if the school was getting outside revenue in the form of private loans, when in reality Corinthian was paying Aequitas to support the loan program. If the proposed settlement is approved, approximately 41,000 Corinthian students could be eligible for $183.3 million in loan forgiveness and reduction. In collaboration with the CFPB, several state attorneys general have also reached proposed settlements with Aequitas.
"Tens of thousands of Corinthian students were harmed by the predatory lending scheme funded by Aequitas, turning dreams of higher education into a nightmare," said CFPB Director Richard Cordray. "Today's action marks another step by the Bureau to bring justice and relief to the borrowers still saddled with expensive student loan debt. We will continue to address the illegal lending practices of for-profit colleges and those who enable them."