California's For-Profit Colleges Under Investigation
The New York state attorney general's office has subpoenaed five for-profit college companies, including two California-based operations, Bridgepoint Education of San Diego and Corinthian Colleges of Santa Ana.
The New York Times and Bloomberg reported the investigation, which makes New York one of six states where attorneys general are known to be investigating for-profits' business practices. Attorneys general in Florida, Iowa, Illinois, Kentucky and Massachusetts have launched similar probes (see chart below). The New York attorney general's office is also looking into Career Education Corporation, Lincoln Educational Services and Trump Entrepreneur Services.
Corinthian Colleges spokesman Kent Jenkins said the company had received a request for documents on Thursday and plans to comply with the demand. He described the request as wide-ranging and general, saying it did not make specific references to the company's one campus in the state of New York - Everest Institute in Rochester.
Corinthian runs more than 120 campuses in 26 states and Canada under the Everest, Heald and WyoTech brands.
Then-California Attorney General Jerry Brown spent three years investigating Corinthian Colleges and filed a lawsuit [PDF] in 2007 alleging the company inflated its job-placement statistics, lied about how much students could expect to earn upon graduation, and offered programs that failed to meet minimum legal standards.
The company that year paid a settlement of about $6.5 million to the attorney general's office for consumer education and protection, and debt forgiveness for former students, among other uses. The company also agreed to stop enrolling students in 11 programs in nine California campuses, according to its 2007 annual report. But Corinthian admitted no wrongdoing, and some describe the sanctions as a slap on the wrist.
A spokeswoman for Bridgepoint Education said the company would comply with the subpoena, but she did not provide additional details about the request. Bridgepoint enrolls about 78,000 students in mostly online programs under the Ashford University and University of the Rockies brands, according to its most recent annual report. The company also has two campus locations in Colorado and Iowa.
Bridgepoint was the focal point of a March 2011 hearing of the Health, Education, Labor, and Pensions Committee. As the Huffington Post chronicled, Bridgepoint executives built the multimillion-dollar company by buying up small colleges that had regional accreditation but were financially strapped.
The company brought in $600 million in federal financial aid in 2010, while nearly two-thirds of students who had enrolled in 2008-09 had dropped out by September 2010.
"In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure," Sen. Tom Harkin, D-Iowa, said at the hearing, according to a Bloomberg report.
Earlier this month, Kentucky Attorney General Jack Conway said he is also leading a joint investigation into for-profit colleges by 10 state attorneys general.
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