The U.S. consumer finance watchdog on Tuesday sued Corinthian Colleges for alleged predatory lending, saying that the for-profit institute lured students into taking out private student loans by touting "bogus" job prospects and using illegal debt-collection methods.

The Consumer Financial Protection Bureau said it wants the company to pay $500 million in relief for the tens of thousands of students affected.

Corinthian Colleges, which describes itself as one of the largest higher education companies in the United States and Canada, says its owns more than 107 campuses in North America, with about 81,300 students and 15,200 employees as of June 2013.

Regulatory Pressure

The company has been in financial trouble following increased pressure from state and federal regulators for its practices.

Last year, the state of California sued the company for misrepresenting job placement rates to its students and investors, false and predatory advertising, and for securities fraud.

The U.S. Department of Education earlier this year delayed disbursement of federal student aid to Corinthian for similar reasons.

In July, the Santa Ana, California-based company announced that it reached an agreement with the Department of Education to sell or close most of its campuses.

'Debt and Despair'

The CFPB suit says that Corinthian led students to believe that upon graduation, they would get jobs that paid well enough for them to pay off their private student loans, that it inflated job placement rates and used illegal tactics to force students to pay their loans while still enrolled in school.

"For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair," CFPB director Richard Cordray said in a statement. "We want to put an end to these predatory practices and get relief for the students who are bearing the weight of more than half a billion dollars in Corinthian's private student loans."