For-Profit College Probe Expands
Career College Central summary:
The Consumer Financial Protection Bureau and state attorneys general are expanding a probe of for-profit colleges and their student- lending practices, according to government officials and regulatory filings.
Kentucky Attorney General Jack Conway, who chairs a group of 32 state attorneys general investigating for-profit colleges, said states are working with the CFPB to ferret out unfair or deceptive student lending and other practices. "I expect in 2014 you'll see action by the CFPB in coordination with states in coming months," Mr. Conway said in an interview.
Corinthian has disclosed a U.S. consumer watchdog is probing its lending practices. The Orange County Register/Zuma Press. Corinthian Colleges Inc. and ITT Educational Services Inc. disclosed in regulatory filings in recent weeks that the CFPB is considering legal action over the companies' lending practices. A CFPB spokeswoman declined to comment.
The federal-state probe focuses in part on loans provided by outside investors through the colleges as well as on the for-profit-colleges' job-placement promises, ramping up pressure on an industry that receives about $30 billion annually in taxpayer-funded federal grants and loans.
The intensifying crackdown comes amid a broader tangle between federal regulators and the for-profit-school sector, which has come under fire from the Obama administration and Democratic lawmakers for allegedly charging high-interest loans without fully disclosing the loan terms and exaggerating students' future earnings potential.
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THE WALL STREET JOURNAL