SAN FRANCISCO, Aug 12 (Reuters) - A U.S. appeals court revived a lawsuit against Corinthian Colleges and its auditor, Ernst & Young, over allegations that the for-profit vocational school operator improperly received funds from the U.S. government.

The for-profit education industry has come under fire for leaving many students burdened with debt.

Two plaintiffs filed a false claims lawsuit against Corinthian and Ernst & Young in 2007, alleging that the college falsely certified its compliance with a ban on recruiter-incentive compensation in order to receive federal education funds.

The U.S. government gave notice it would not pursue the plaintiffs' claims against Corinthian, and a lower court had dismissed the complaint against both companies.

However, the 9th U.S. Circuit Court of Appeals on Friday gave plaintiffs a chance to refashion their claims to try to move the lawsuit forward.

Representatives for both companies did not immediately comment on the ruling.

The case is Lee et al v. Corinthian Colleges, U.S. Court of Appeals for the Ninth Circuit, No. 10-55037.

For appellants: Scott Levy of the Law Offices of Scott. D. Levy & Associates.

For Corinthian College: Brad Brian and Blanca Young of Munger Tolles & Olson.

For Ernst & Young: Timothy Hatch and James Zelenay of Gibson, Dunn & Crutcher and Bruce Cormier of Ernst & Young.

(Reporting by Dan Levine)

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