Job-Placement Problems Could Cost Some Career Education Colleges Their Accreditation

The largest of the national accreditors is threatening to withdraw its approval of 49 health and art-and-design colleges owned by the Career Education Corporation, less than a month after the company reported problems with the colleges' job-placement rates.

Last Monday the Accrediting Council for Independent Colleges and Schools sent a letter to the corporation ordering it to "show cause" why the colleges should retain their accreditation, the company disclosed in a filing today with the Securities and Exchange Commission.

The accreditor will hear the company's appeal at its annual meeting, in early December.

The Career Education Corporation stumbled on the placement-rate problems at its health and art colleges this fall, while gathering documents to respond to a subpoena from the New York attorney general. It hired a lawyer to investigate placement-rate practices on all of its campuses and reported its discovery to the council.

The investigation confirmed that certain placements "lacked sufficient supporting documentation" or otherwise failed to meet the company's "placement guidelines," according to a company news release. Removing those graduates from the total caused all but 13 of the company's health-education and art-and-design colleges to drop below the 65-percent placement-rate benchmark set by the council.

The investigator is still reviewing placement-rate data at the company's other domestic campuses, including American InterContinental University, Colorado Technical University, and its culinary schools.

In a conference call with investors three weeks ago, Michael J. Graham, the company's chief financial officer and executive vice president, said it had taken action against career-services employees responsible for the "improper actions" and would retrain its remaining employees. He said the company would clarify its criteria for counting placements and would cap enrollments in some programs where jobs were scarce, while closing others.

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