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Kentucky Steps Up Scrutiny of For-Profit Schools

Kentucky has been stepping up its scrutiny of for-profit schools in the state. Now, state legislators are proposing legislation that would increase accountability and oversight of for profit schools, and the state’s attorney general, Jack Conway, is opening up an investigation into the practices of the industry.

A joint education committee meeting between the state’s house and senate convened last fall to hear from students of for-profit schools.  In an interview with Campus Progress, Rep. Reginald Meeks (D), the sponsor of the proposed legislation, described the testimony of students at the hearing.  Students testified said that some of the state’s for-profit colleges were leaving them with high loads of debt and sometimes unemployable.  Some students testified that they didn’t realize their schools weren’t accredited and some schools were dishonest in the claims they made when students were recruited, Meeks says.

Unfortunately, such stories aren’t uncommon. Last year the Government Accountability Office released an undercover video and report that documented for-profit recruiters making false claims about the school’s programs and encouraging students to lie on Federal Aid applications. A Bloomberg investigation reported last year that some for-profits were recruiting students from homeless shelters.  (This video from Campus Progress summarizes abuses found in those and other investigations.)

Currently for-profit students account for about just 10 percent of all students, yet they account for about a quarter of federally subsidized student aid and nearly half of all loan defaults.  Some for-profit schools have alarmingly high default rates for their students; a recent Senate committee report found 12 for-profit schools they examined had default rates higher than 50 percent.

After hearing testimony from students, Kentucky legislators asked to hear from the then-chairman of the State Board of Proprietary Education (SBPE), Mark Gabis. (Kentucky is one of few states that has such an oversight board.).  But Meeks said Gabis’ testimony “raised more questions and concerns than it answered.”

Gabis is also the president of Owensboro-based Daymar College, a college that is currently the defendant in a lawsuit brought forth by former students that alleges that the school left them unprepared for the job market. Gabis has since stepped down as chairman of the SBPE.

Meeks noted that Gabis admitted the board hadn’t done an internal audit and hadn’t responded to students’ requests for help from the state’s $500,000 Student Protection Fund.

Kentucky’s Attorney General Jack Conway (D) announced an investigation into industry practices on Dec. 15 for potentially violating the state’s consumer protection law. Conway issued six subpoenas to for-profit schools, but declined to list the schools that are under investigation. Rep. Meeks also requested an audit of the SBPE from Kentucky’s state auditor, Crit Luallen, on Dec. 29.

Meeks is proposing legislation that aims to provide greater oversight to these for-profit schools. It would place them under the authority of the state’s council on postsecondary education, bringing the schools under scrutiny similar to that of other state-funded institutions. Right now, the State Board of Proprietary Education is dominated by individuals with financial or other ties to proprietary schools.

“There’s a sense that the fox is guarding the henhouse,” Meeks says. “The decisions [the board] have made protect the schools more than the citizens of the commonwealth of Kentucky.”

The groups that work on behalf of the for-profit schools in Kentucky say they are reserving their judgment on the legislation. "We are still processing the substantive provisions of Rep. Meeks' bill, but we will be happy to work with him and his colleagues toward a mutually acceptable solution," says Brenda L. Gargano, Executive Director of Kentucky Association of Career Colleges & Schools.

Still, Meeks says he recognizes that for-profit schools serve a purpose, and there are some that have close affiliations with other non-profit institutions or with industries that are doing a good job of preparing students. But others he says “may not offer the panacea that they claim they do.”

Kay Steiger is the editor of CampusProgress.org.

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