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July 29, 2011

Kentucky Attorney General Jack Conway filed suit last week against the owners and operators of Daymar College, a for-profit institution with 11 campuses in this state, including two in Louisville. Mr. Conway alleges the school ripped off its students by substantially overcharging for textbooks and misleading them about financial aid and transfer of credit hours to other schools. Daymar also is alleged to have failed to meet its own accreditation and admission standards. Bottom line: Daymar College is accused of violating the state’s Consumer Protection Act.

If the charges are true — and Daymar says it will “vigorously defend” itself in court — they constitute much more than that.

Not all proprietary colleges operate as predators; indeed, some are very good schools. But the worst of them feed a sleazy reputation built on exploited hopes, fears and dreams of people wishing to change their lives — with higher price tags than public colleges and universities, to boot.

By violating their own standards of admission, they increase chances that their students will withdraw from for-profit colleges and default on loans. For instance, Daymar received more than $11 million in Pell Grants for the 2009-10 school year, and it has the second-highest default rate among Kentucky-based schools. Meanwhile, the student populations at these schools continue to grow, and so do the amounts of government financial aid.

Mr. Conway and his office continue their investigation into the practices of six other for-profit colleges in Kentucky, and he chairs a national effort joined by other states’ attorneys general to examine potential abuses in the for-profit college industry throughout the country.

In a June 5, 2011, op-ed piece for The New York Times, Mr. Conway wrote that too many of the for-profit colleges — many of them owned by hedge funds or publicly traded — “abuse the public trust by showing greater interest in profiting from student loan money than educating students.” In a presentation to Kentucky lawmakers the same month, Mr. Conway compared some costs: $2,657 for a diploma/certificate in medical billing and coding from a community college; an average cost of $14,238 for the same diploma at a for-profit college.

The Attorney General must not be alone in providing tougher scrutiny for proprietary colleges. An attempt to add oversight by the state’s Council for Postsecondary Education failed in the last session of the General Assembly. Kentuckians ought to be troubled that the state Board for Proprietary Education, which includes employees of for-profit colleges (Daymar College president Mark Gabis has recently chaired the board), still oversees for-profit colleges offering degree programs below the baccalaureate level.

That is too close for comfort, given the potential for conflict of interest and the personal and financial stakes involved.

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