Currently there are 141 for-profit colleges in Kentucky, which are seeing significant growth. National enrollment in proprietary colleges is nearing two million students, compared to a half-million in 1998. The schools cater mostly to students seeking employment skills. But complaints about for-profits are on the rise, especially concerning high student loan default rates, credits that don’t transfer and unrealistic employment promises.
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Legislation seeking greater accountability from proprietary colleges cleared the democratically-controlled Kentucky House this year 57-38, but died in the republican-controlled Senate. The legislation came in the wake of action by State Auditor Crit Luallen, who took a hard look at the state board that oversees for-profit colleges, and didn’t like what she found.
“The board lacks a clear understanding of its role and responsibilities,” said Luallen.
But at a lengthy hearing in Frankfort, Luallen told a legislative panel the board has a new director and many of the problems revealed in the audit are being addressed. Also responding to growing complaints about for-profit colleges is Attorney General Jack Conway, who last December announced he was opening civil, not criminal, investigations into six of the schools.
“Five of the six have been cooperative,” said Conway. “One in particular hasn’t. One has challenged our authority to even issue the CID’s in the first place, in the Franklin Circuit Court.”
Conway says that case involves National College, a 125-year old for-profit with six campuses in Kentucky. The case continues, and neither side’s talking about the legal issues, but Roger Dalton of National College appeared at the hearing to assure lawmakers students are the company’s top priority.
“Most of our degrees prepare students to enter the work force in health care support occupation, business management, administrative support and personal service occupations,” said Dalton.
Attorney General Conway doesn’t deny many for-profits provide quality, much-needed educational services. But he says the schools tend to be expensive, compared to public colleges and universities, and reap huge profits. He also questions why for-profits spend more money on student recruiters than on job placement staff. But some of Conway’s remarks didn’t sit well with Republican Sen. Damon Thayer of Georgetown.
“I’m concerned with your testimony today that you’re indicting an entire industry,” said Thayer. “You know, we’ve already heard it called predatory just here today after your testimony. And I think that’s a little over the top.”
Conway fired back.
“I’ve showed you the fact that they now account for 12 percent of the students, 25 percent of loans and half of defaults,” said Conway. “That’s a trend that’s emerged over the last decade or so. And if we, we as public servants, are going to be good stewards of taxpayer dollars, I think we need to take a look at this particular issue.”
Lawmakers likely will revisit the issue in the 2012 session – possibly even reintroducing the legislation that failed this year. But Republican Sen. John Schickel of Union says economic factors must be considered in any discussion of proprietary colleges. He reminds his colleagues the schools boost local economies through jobs, taxes and many other ways.
“Renting property, warehouses, that quite frankly in my district would probably be vacant,” said Schickel. “And are not coming to the Kentucky General Assembly and asking for money for capital improvements.”
Similar economic arguments, made this year during one of the worst recessions in U.S. history, were successfully used by the payday loan industry in Kentucky to fend off legislative attempts to place that oft-criticized industry under tighter regulatory control.