State AGs Investigating For-Profit Education FirmsJanuary 27, 2014 |
Attorneys general for more than a dozen states have ordered several for-profit education companies to turn over information on the firms’ business practices.
ITT Educational Services Inc., Corinthian Colleges Inc., Career Education Corp. and Education Management Corp. disclosed Friday and Monday that they had received subpoenas or civil investigative demands from a group of state attorneys general.
The inquiries are broad, covering student lending, advertising and recruitment, graduate certification and licensing, and graduation and job placement rates, according to the companies’ filings with the Securities and Exchange Commission.
For-profit education companies are facing public criticism and regulatory scrutiny over high drop-out rates, graduates’ poor job prospects and the high debt levels of its students. Enrollments have also been shrinking for years in response to tighter regulation and the modest economic recovery.
Career Education, based in Schaumburg, Ill., runs schools including Le Cordon Bleu North America and Colorado Technical University.
Santa Ana, Calif.-based Corinthian Colleges runs schools under the Everest, WyoTech and Heald brands.
Pittsburgh-based Education Management’s schools include Argosy University and Brown Mackie College.
ITT Educational Services, which is based in Carmel, Ind., runs its namesake institutes and Daniel Webster College.
Among the states identified as being part of the probe: Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Tennessee and Washington.
The four companies said that they plan to cooperate with the states involved.
Career Education ended regular trading down 35 cents, or nearly 6 percent, at $5.72 on Monday, while shares of Education Management tumbled 97 cents, or 10 percent, to $8.70. ITT Educational Services fell 40 cents to $41.01. Shares in Corinthian Colleges dipped 2 cents to $1.55.