Thirty-two states are now working together under the leadership of Kentucky Attorney General Jack Conway to investigate potential abuses in the for-profit college industry, which saw enrollment more than triple between 1998 and 2008, according to the Consumer Finance Protection Bureau.
One reason for the concern is the amount of taxpayer dollars involved: Some for-profit colleges receive 90 percent or more of their revenue from the federal and/or state governments in the form of student aid.
“While some for-profit schools offer quality training and legitimate diplomas, we have found that this industry often markets subpar programs to veterans and low-income students who depend on federal aid,” Massachusetts Attorney General Martha Coakley said. “When students don’t receive the training they sign up for, or default on their loans, it not only greatly impacts their future but it also impacts taxpayers who have backed these loans in the first place.”
Coakley’s office is investigating DeVry, as are Illinois Attorney General Lisa Madigan and the Federal Trade Commission.
“We’re approaching them with a view toward transparency and an interest in demonstrating the compliant nature of our practices,” said Ernest Gibble, a spokesman for DeVry, on the investigations. DeVry declined to comment on Hastie’s particular situation, citing federal privacy restrictions.
Coakley also has taken aim at for-profit Corinthian Colleges and Corinthian Schools, with more than 100 schools nationwide. In a lawsuit filed earlier this month, she alleges Corinthian used deceptive marketing and high-pressure tactics to persuade students to enroll and take out high-interest subprime loans.
According to the complaint, Corinthian misrepresented the job placement rate of its graduates and misled students about the salaries they could expect after completing their programs. The lawsuit also alleges that Corinthian encouraged students to take out subprime loans with interest rates of up to 18 percent.
In disputing the allegations, Corinthian said Coakley’s office “disregards substantial, independent evidence that our two schools in Massachusetts have a strong record of offering students a quality education and treating them honestly and fairly.”
Last October, California Attorney General Kamala D. Harris also filed a lawsuit against Corinthian alleging it engaged in false and predatory advertising and misrepresented job placement rates.
“There’s no doubt that more needs to be done by both states and the federal government as well as the accreditors to protect both students’ and taxpayers’ interests,” said Pauline Abernathy, vice president of The Institute for College Access and Success, a nonprofit based in Oakland, Calif., which aims to make higher education more available and affordable.
(Next page: The lawsuits you should know about)