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Apr 04, 2014 11:04 AM EDT

Massachusetts Sues National Chain Of For-Profit Colleges For Deceptive Marketing

KSU Interim President Gives up $90,000 to Boost Paychecks of Lowest-Paid Workers.
(Photo : CC/Flickr: 401K) KSU Interim President Gives up $90,000 to Boost Paychecks of Lowest-Paid Workers.

A national chain of for-profit school was sued by the state of Massachusetts Thursday over allegations that it engaged in illegally deceptive marketing, Inside Higher Ed reported.

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Massachusetts Attorney General Martha Coakley filed the suit alleging that Corinthian colleges Inc., a publicly traded industry giant with about 100 campuses all over the country, including two in Massachusetts, misrepresented its training programs and job placement rates in order to increase profits.

The complaint also alleges that Corinthian, which subsists largely on taxpayer-backed loans to students, focused intently on recruiting new students regardless of their qualifications or whether the students were likely to complete or benefit from Corinthian's programs.

 "We allege that this for-profit school aggressively recruited and misled students by falsely promising high quality, successful training programs, and instead left them with exorbitant student loan debt and without proper training or a well-paying career," Coakley said in a statement.

She said the national school chain also pushed students to take out high-interest subprime loans through the school - the rates were as high as 18 percent -so they could qualify for federal student loans, Coakley alleged in the complaint, according to The Boston Globe.

 "They are promising both quality in education and employment rates that they just can't deliver on," Coakley told the Boston Globe. "The only ones who are doing well in this appear to be the investors on Wall Street."

Kent Jenkins, a spokesman for Corinthian, told The Boston Globe he disputed the allegations in the complaint. He said that after a three-year investigation, "Coakley's office had failed to produce a single complaint from a student at either Massachusetts location."

"The Massachusetts Attorney General's Office disregards substantial, independent evidence that our two schools in Massachusetts have a strong record of offering students a quality education and treating them honestly and fairly," Corinthian said a statement. "We will vigorously defend the record of our campuses in Massachusetts."

Coakley said her office will continue to investigate the for-profit school industry "as we continue to see students and taxpayers suffer the consequences of high default rates, inadequate training, and mounting debt."

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