Slightly more than half of the students at for-profit schools received Pell Grants, federal aid that helps low-income students attend college. The study found that students in private for-profit schools were less likely to graduate with a four-year degree than those in other schools, although they were more likely to earn a two-year degree than their peers in other institutions.

Last year’s GAO study set off a storm of controversy around the schools.

Using undercover testing, the agency found some schools encouraging students to falsify their financial aid applications in order to qualify for federal grants. Other schools misrepresented their programs’ graduation rates, job-placement rates, and costs while recruiting students.

State consumer protection laws have long given officials authority to regulate the business practices of for-profit schools to combat fraud. But not many of them looked at the schools very closely until recently, when they realized that increasingly large numbers of their students were signing up at these institutions.

Most of this year’s state legislation is designed to go further than previous enforcement efforts by explicitly targeting for-profit schools, giving state education agencies oversight jurisdiction to monitor their practices and requiring the schools to contribute to student loan guarantee funds.

Harris Miller, president of the Association of Private Sector Colleges and Universities, which represents for-profit schools, says he does not object to states updating a regulatory system that has had trouble keeping up with the colleges’ growth.

But he questioned the motives of some state politicians who, he says, are more concerned with state budgets than with educational practices.


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