For-Profit Colleges Face More State Scrutiny

Last fall, the federal government started drafting new rules to rein in the recruiting practices of for-profit colleges. That effort followed a report by the U.S. Government Accountability Office that found the colleges deceived potential students about graduation and job placement rates in the process of getting them to enroll and sign up for state and federal loans. The colleges called the report flawed, but that didn’t keep Education Secretary Arne Duncan from vowing to change the way the schools do business.

The Education Department, however, has postponed publishing the new rules after facing heavy pressure from for-profit education lobbyists and opposition in Congress. That has led several states, tired of waiting for action from the federal government, to take matters into their own hands.

Legislators say they are simply trying to protect students and consumers in their states. Backers of the for-profit schools say fiscally troubled state governments are seeking to save money by restricting the amount of public aid that for-profit schools are entitled to.

Deanne Loonin, an attorney for the National Consumer Law Center who tracks for-profit schools, says that while the bulk of the lobbying has been at the federal level so far, the action on this issue is shifting to state capitals. She expects that movement to continue. "There’s definitely been a lot of resources poured into the states," she says, "and I expect there will be more."

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