The Wall Street Journal. May 26, 2014.
Federal and state officials are conducting probes into for-profit colleges over concerns that schools are marketing career-training programs that lack proper accreditation for students in certain fields, according to government agencies and regulatory filings.
The investigations, being conducted by the Federal Trade Commission and some state attorneys general, focus on whether students are being deceived by for-profit colleges offering programs in career paths such as nursing, education, psychology and law enforcement. States are forcing for-profit colleges to refund money to students who say they were misled.
Representatives of for-profit colleges defend their track records in training students and say they disclose that there are no guarantees that students will be able to find jobs in their chosen fields.
Noah Black, a spokesman for the Association of Private Sector Colleges and Universities industry group, said the probes stem from "activist attorneys general partnering with individuals that are ideologically opposed to our institutions."
Officials say students often take on tens of thousands of dollars in debt to get an accredited degree but can graduate from a program with an accreditation that isn't widely accepted by employers.
Iowa Attorney General Tom Miller this month reached a $7.25 million settlement with Ashford University and parent company, Bridgepoint Education Inc., BPI -2.35% a publicly traded company based in San Diego. The state accused the school of leading students to believe that an online degree would allow them to become classroom teachers, without disclosing that additional coursework would be necessary.
The school denied the allegations. The university "is proud of its high quality, affordable education and will continue to remain dedicated to long-term student outcomes," Ashford President Richard Pattenaude said in a prepared statement.
For-profit schools, which enroll about 13% of all students in higher education, are facing scrutiny on several fronts. The U.S. Education Department has proposed eliminating federal funding for institutions with high proportions of graduates who default or whose debt levels are high relative to the graduates' incomes. And the Consumer Financial Protection Bureau is examining whether some schools prodded students into high-cost college loans.
U.S. educational institutions are evaluated by and receive accreditation from private regional or national organizations, which entitle the schools to receive federal student aid.
Federal officials are concerned that while institutions may be accredited on the national level, they may lack proper credentials from specialized organizations that accredit programs in particular fields.
A for-profit college accreditation "may not allow the person to get whatever license is required to get a job," said FTC official J. Reilly Dolan.
The New Mexico attorney general's office this year sued ITT Educational ServicesInc., ESI +0.53% alleging that the school falsely claimed it was on track to get accreditation from a national nursing group.
A spokeswoman for the publicly traded company denied that it misled students, saying the company "did not, and could not, ever guarantee that it would obtain" accreditation. The case is pending.
The FTC has requested documents from publicly traded DeVry Education Group Inc.DV +0.26% over its marketing and advertising practices, according to a DeVry regulatory filing this year. DeVry declined to comment.
Mr. Dolan said the FTC is investigating companies in the education sector but declined to provide other names.
Critics said the schools are taking advantage of students, some of whom aren't well-versed in the certifications that future employers will require.
Colorado Attorney General John Suthers in December reached a $3.3 million settlement with Argosy University, after alleging that the Denver school deceived students in a doctoral psychology program. The state said Argosy misled students by telling them they would be eligible to become licensed psychologists and that the program was on track to be accredited by the American Psychological Association when that wasn't the case.
In the Colorado settlement, 40-year-old Heather McQueen of Denver is getting more than $107,000 of her student loans repaid by Argosy. She left the program and got her degree from a nonprofit school in San Francisco after discovering that the Argosy program didn't meet several Colorado requirements for psychologists.
Argosy and its Pittsburgh-based parent company, Education Management Corp.EDMC -0.50% denied the attorney general's allegations. A spokesman said it "was important for us to cooperate" with the state and declined to comment on Ms. McQueen's case.
Bryan Babcock, a Marine Corps veteran from Kirkland, Wash., said he didn't complete a law-enforcement program at ITT Technical Institute after discovering that more than 20 police departments didn't recognize its accreditation. The 35-year-old, who works as a driver for a corporate housing company, said he had $50,000 in student-loan debt after three years of study.
An ITT spokeswoman said students pursuing law-enforcement careers sign disclosures acknowledging that they should contact police departments to determine their employment requirements. "We work hard to ensure that staff complies with the letter and spirit of federal and state regulations" and did so in Mr. Babcock's case, she said.