State lawmakers look to limit influence of for-profit colleges

Kentucky's attorney general has taken an aggressive stance toward for-profit colleges.

Kentucky’s for-profit colleges and universities, many with large online course offerings, could face tighter regulations after members of an education committee in the State Senate voted unanimously to form an oversight committee for for-profit schools.

The Senate Education Committee on March 26 approved the oversight bill that will alter the State Board for Proprietary Education to regulate for-profit schools. The board existed before the new law was introduced, but six of the 11 board members were from for-profit programs.

The new measure would limit the number of for-profit employees on the board to four.

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Other members of the for-profit oversight board would be chosen from the state’s Council on Postsecondary Education, Education and Workforce Development Cabinet, and the state Department of Education, along with four at-large members, according to the proposed legislation.

Along with the added oversight of an industry that has been accused of misleading claims and illegal recruitment practices, every certified for-profit college in Kentucky would be required under the proposed law to contribute to a $500,000 student protection fund that would be tapped to pay off student loans if a school closes or loses its accreditation.

The for-profit oversight law even received backing from the state’s career college industry. Candance Bensel, executive director of the Kentucky Association of Career Colleges and School, described the legislation as “a good bill that improves protection for students without imposing burdens that interfere with the opportunity for Kentuckians to pursue a career education.”

Bensel added that “much has been made of a few anecdotal cases highlighting areas that needed to be addressed” in for-profit education.

Kentucky lawmakers took bipartisan action to bolster oversight over the for-profit education industry after the state’s attorney general, Jack Conway, gained national attention for large settlements secured from shuttered for-profit schools.

“I am concerned because there is a growing trend of proprietary colleges issuing private loans to students and with such harsh consequences for failure, these students are trapped in a cycle of dodging bill collectors, wage garnishment and no meaningful path to financial recovery,” said Conway, who testified March 20 before a U.S. Senate subcommittee on propriety colleges and universities.

The new law, known as House Bill 308, would establish a formal complaint process for students at for-profit colleges.

“It is … my duty to ensure that consumers are not being taken advantage of as a result of unfair or false business practices,” Conway said after the bill cleared the State Senate Education Committee.

Kentucky’s Decker College, after it was shuttered in 2005, tried to collect on millions in student loans the school had made directly to its students. The attorney general’s office investigated the closed college, and the school released more than 2,200 student loans worth $4.5 million.

A similar scenario played out at the Barkley Schools of Law. The college, formerly known as the American Justice School of Law (AJSL), attempted to collect thousands of student loans after it closed its doors.

Conway oversaw a settlement between Barkley and its former students, lowering the average loan debt of every student by about $25,000.

The frequency of for-profit college scandals that have cropped up throughout the state in recent years made it nearly impossible for lawmakers to ignore the issue of college oversight, wrote Blue Bluegrass, a blog that tracks Kentucky politics.

“As the cost of a public college education has born the back of tax increases by underfunding legislatures, cynical for-profit colleges have been more than willing to step in and make matters worse,” the blog said. “Aggressively targeting students strictly to squeeze them into loan debts they can never pay back in exchange for worthless degrees. No wonder more oversight is finally being recognized as needed.”

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