State attorneys general investigating major for-profit school businesses

A coalition of attorneys general from at least 12 states is investigating major for-profit school companies, according to recent news reports.  The investigation reportedly includes Education Management Corp., Corinthian Colleges, Career Education Corp, and ITT Tech.  The Huffington Post reports that each company has filed disclosures with the Securities Exchange Commission regarding the investigation, and "Each school said it was being probed by a group of 12-13 state AGs, with the AGs of Kentucky, Iowa, Pennsylvania, and Connecticut each taking the lead on investigating one of the companies.  All four companies said they intended to cooperate." 

Federal agency investigates ITT and Corinthian

The newly created Consumer Financial Protection Bureau is investigating ITT Educational Services and Corinthian Colleges -- two of the nation's largest for-profit education companies.
As reported in the Chronicle of Higher Education, the agency has informed ITT and Corinthian regarding its investigations, although the precise nature of the inquiries has not become public.  A senior analyst for Wells Fargo Securities, according to the Chronicle, has written that ITT is most likely being investigated after disclosing that it expected more than 50 percent of its student borrowers to default on their private loans.

Massachusetts investigates University of Phoenix

Massachusetts is investigating University of Phoenix, demanding that the nation's largest for-profit college provide the state's attorney general with data regarding its recruiting and financing practices. Massachusetts attorney general Martha Coakley, according to the Boston Globe, is investigating whether for-profit colleges use unfair or deceptive practices in the recruitment of students and the financing of their educations. University of Phoenix's owner, Apollo Group, has disclosed that that is has been asked for nine years' worth of detailed information about its Massachusetts operations.  Massachusetts also is investigating Kaplan Career Institute in Boston, which is owned by The Washington Post Co., and the Everest Institute campuses in Brighton and Chelsea, which are owned by Corinthian Colleges, Inc.

For Profit Colleges Suffer Enrollment Drops

The Chronicle of Higher Education reports that intense public scrutiny of the nation's largest for-profit higher education have taken a toll on enrollment, revenue and profit.  Companies including Career Education Corporation, Corinthian Colleges, and Kaplan have all experienced declines during a period of "negative publicity abut their colleges from Congressional hearings, lawsuits, and state investigations," according to the Chronicle.
In some instances in the for-profit school sector, declining enrollment and revenue actually prompts admissions officials -- who are responsible for meeting sales targets -- to engage in deceptive practices on issues like accreditation, credit transferability, and placement.   If you are a student or school official with concerns about the practices of a particular for-profit school, click here.