Despite Widespread Investigations, Few Attorneys General Taking Action Against For-Profit Colleges

The number of state attorneys general investigating for-profit colleges grew to 23 in 2011, as states’ top enforcers sought answers to why for-profit schools are leaving students buried in debt with bleak job prospects, all while taking most of their revenue from the federal government. Though the investigations are separate, the attorney generals formed a working group last spring to share information about the colleges.

But despite the widespread investigations, few AGs have taken action. Attorneys general Lisa Madigan of Illinois and Jack Conway of Kentucky have filed lawsuits against for-profits, but few others have joined as the group struggles to find “common targets,” Conway said in a recent Senate hearing:

“This effort is distinct from the tobacco and mortgage settlements,” in which attorneys general united against the nation’s largest cigarette manufacturers and banks, he said. “Here we have such a diffuse group of schools, with some operating only in certain states.

“We’re sharing information,” he continued. “But we’re having some difficulty finding common targets.”

Conway has sued three for-profit colleges in Kentucky, alleging that the schools misled students and the federal government about financial aid and inflated job-placement numbers. In February, Madigan filed suit against Westwood College, alleging that it misled students about its accreditation.

The working group may now have a common target that could lead to further suits, Conway said in the Senate hearing. The group is now working with the Consumer Financial Protection Bureau to investigate the for-profits’ institutional student loan processes, in which the schools issue loans they don’t expect to be repaid in order to game federal laws governing financial aid practices.