August 18, 2017
California announced a tentative settlement that provides over $51 million in debt relief for Californians who attended Corinthian Colleges
. Corinthian intentionally targeted low-income, vulnerable individuals through deceptive and false advertising that misrepresented job placement rates and school programs. These unlawful activities were enabled by Aequitas Capital Management Inc.
, a private equity firm currently under U.S. Securities and Exchange Commission-imposed receivership. Federal student loans made up almost 90 percent of Corinthian’s revenue. To maintain this revenue, Corinthian needed its mostly low-income students to receive these loans. Federal rules require for-profit colleges receive at least 10 percent of their revenue from sources other than federal student aid. To help fill this gap, Aequitas and Corinthian created a financial arrangement whereby Aequitas provided private loans to Corinthian students, and Corinthian guaranteed Aequitas a profit and agreed to buy back all non-performing loans. CA