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New York AG investigates Calif. for-profit college companies

Everest CollegeDerrick Coetzee/FlickrEverest College

The New York state attorney general's office has subpoenaed five for-profit college companies, including two California-based operations, Bridgepoint Education of San Diego and Corinthian Colleges of Santa Ana.

The New York Times and Bloomberg reported the investigation, which makes New York one of six states where attorneys general are known to be investigating for-profits' business practices. Attorneys general in Florida, Iowa, Illinois, Kentucky and Massachusetts have launched similar probes (see chart below). The New York attorney general's office is also looking into Career Education Corporation, Lincoln Educational Services and Trump Entrepreneur Services.

Corinthian Colleges spokesman Kent Jenkins said the company had received a request for documents on Thursday and plans to comply with the demand. He described the request as wide-ranging and general, saying it did not make specific references to the company's one campus in the state of New York – Everest Institute in Rochester.

Corinthian runs more than 120 campuses in 26 states and Canada under the Everest, Heald and WyoTech brands.

Then-California Attorney General Jerry Brown spent three years investigating Corinthian Colleges and filed a lawsuit [PDF] in 2007 alleging the company inflated its job-placement statistics, lied about how much students could expect to earn upon graduation, and offered programs that failed to meet minimum legal standards.

The company that year paid a settlement of about $6.5 million to the attorney general's office for consumer education and protection, and debt forgiveness for former students, among other uses. The company also agreed to stop enrolling students in 11 programs in nine California campuses, according to its 2007 annual report. But Corinthian admitted no wrongdoing, and some describe the sanctions as a slap on the wrist.

A spokeswoman for Bridgepoint Education said the company would comply with the subpoena, but she did not provide additional details about the request. Bridgepoint enrolls about 78,000 students in mostly online programs under the Ashford University and University of the Rockies brands, according to its most recent annual report. The company also has two campus locations in Colorado and Iowa.

Bridgepoint was the focal point of a March 2011 hearing of the Health, Education, Labor, and Pensions Committee. As the Huffington Post chronicled, Bridgepoint executives built the multimillion-dollar company by buying up small colleges that had regional accreditation but were financially strapped.

The company brought in $600 million in federal financial aid in 2010, while nearly two-thirds of students who had enrolled in 2008-09 had dropped out by September 2010.

“In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure,” Sen. Tom Harkin, D-Iowa, said at the hearing, according to a Bloomberg report.

Earlier this month, Kentucky Attorney General Jack Conway said he is also leading a joint investigation into for-profit colleges by 10 state attorneys general.

State attorneys general investigate for-profit college companies
State Company Focus
Florida Education Management Corporation's Argosy University Determine whether colleges have violated Florida law prohibiting deceptive or unfair business practices
  Corinthian Colleges' Everest College
  Kaplan University
  MedVance Institute
  University of Phoenix
  Keiser University
  Concorde Career College
  Career Education Corporation's Sanford Brown College
Illinois Kaplan University Unclear
Iowa Bridgepoint Education's Ashford University Possible violations of the Iowa's Consumer Fraud Act
Kentucky Education Management Corporation's Brown Mackie College (and five other unnamed universities) Student loan default rates, recruitment practices and job placements
Massachusetts University of Phoenix Recruitment and student loan practices
  Corinthian Colleges' Everest College
  Kaplan University's Kaplan Career Institute
New York Career Education Corporation Unclear
  Corinthian Colleges
  Lincoln Educational Services
  Bridgepoint Education
  Trump Entrepreneur Initiative

Sources: News reports and filings with the U.S. Securities and Exchange Commission


Filed under: Higher Ed, Daily Report


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