Waste, fraud, and abuse have been uncovered at many for-profit colleges; but the question remains whether federal and state authorities can drive out the worst offenders and reform the entire sector. For-profit colleges have been found to be a major factor in the $1 trillion student debt crisis, accounting for just 13 percent of U.S. college students but about 47 percent of all student loan defaults.
Kentucky Attorney General Jack Conway has led a bipartisan group of 32 state AGs seeking to investigate and sue offenders, such as the misleading GIBill.com website and Career Education Corp.'s deception about job-placement rates for graduates. Meanwhile, the Justice Department in September shut down the ATI Career Training Center and is pursuing a suit against for-profit college company EDMC. The Consumer Financial Protection Bureau and the Securities and Exchange Commission are both investigating Corinthian Colleges. The Federal Trade Commission is stepping up, too, issuing new guidelines for trade schools and consumer warnings for students.
The Department of Education, in contrast, has stalled in establishing a gainful employment rule, as the for-profit college industry tries to fight back and claims that its sector is being victimized.