In a letter to SEC chairman, Jay Clayton, Warren and colleagues asked for the rationale behind the deal.
When Corinthian Colleges collapsed in 2015 under the weight of allegations the for-profit college misled students about job placement and graduation rates, it left thousands of students with debt and few palatable options.
Massimino will pay $80,000 and Owen $20,000 to settle claims that the two failed to disclose risks to the company’s primary source of revenue — federal financial-aid funds — to the public and investors. In the letter, Warren and her colleagues contrasted the executives’ fate with that of former Corinthian students, many of whom are still struggling under the weight of the debt they took on to attend the school.
Corinthian was the first in a series of major for-profit colleges to collapse and, so far, the executives who ran the schools leading up to their demise have faced few major consequences. The former CEO and CFO of ITT Tech, which collapsed in 2016, agreed to pay $200,000 and $100,000 respectively to settle with the SEC over claims that the school misled investors about the impact of two failing student-loan programs on the company’s bottom line.
Historically, Warren has been one of the most aggressive critics of the for-profit college industry. Her campaign for president has yet to release her plans on college affordability and student debt, but this history suggests that tightening regulations on for-profit colleges would likely be part of that platform.
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