States, Federal Government Cracking Down On Career Colleges

Career College Central summary:

  • Attorneys general from across the country are investigating career colleges accused of leaving students with heavy loan debt and without marketable job skills. At least 32 states are working together to investigate the schools, while several more are working independently on similar cases. California Attorney General Kamala Harris filed suit against Corinthian Colleges in October. And last summer, New York announced a $10.25 million settlement with industry giant Career Education Corp over claims it inflated graduates' job-placement rates.
  • In cooperation with several states, the Consumer Financial Protection Bureau recently sued ITT Educational Services (ESI), which operates about 150 schools under the names ITT Technical Institute and Daniel Webster College, for predatory lending practices, including pushing students into high-interest loans they couldn't repay. It's the CFPB's first such lawsuit. Corinthian has noted in regulatory filings that the CFPB is investigating its lending practices. The CFPB has not acknowledged the investigation, but the agency has posted on its website a Corinthian document objecting to the probe.
  • The regulatory efforts follow several years of stymied attempts by the Department of Education to impose new regulations on the private, for-profit higher-education industry, and decades of relative inaction by state authorities. After all, students rely on public aid, including grants paid from state taxes, to attend these colleges, said Allison Martin, a spokeswoman for Kentucky's attorney general, Jack Conway.
  • Critics say the for-profit colleges' lobbying arm, the Association of Private Sector Colleges and Universities, is a main reason the government has not cracked down on the industry's dubious practices. A spokesman for the group's president, former Congressman Steve Gunderson, declined to answer questions.

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