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States investigating ITT, other for-profit education firms

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Attorneys general for more than a dozen states have ordered several for-profit education companies to turn over information on the firms' business practices.

Carmel-based 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 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.

ITT Educational Services fell 40 cents Monday, to close at $41.01 each.

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. Shares in Corinthian Colleges dipped 2 cents, to $1.55.

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  • Didn't they already do this?
    This is not the first time they have investigated ITT and, if I recall, they never found anything the first few times they investigated. Why do they continue to waste money investigating? It's simple. The student base that these schools attract are those from less fortunate situations. These are not students who are choosing ITT instead of Purdue. These are students who can't get into Purdue, or maybe failed at Purdue. The drop out rate will be high for this student base. The default loan will be high for these students. What is the alternative? Ivy Tech? I took a few classes there for fun (I have a Bachelor's degree from IU). The classes were not academically challenging. I think the government should stop picking on for-profit schools. They serve a purpose.
  • A Victim at TechSkills
    TechSkills here in Indianapolis should also be on the list. I went to their Medical Coding program with assurances that the school would place me in a decent paying job. An $8,000.00 Sallie Mae loan was my only reward. Have a great job using former educational skills but a monthly loan to remind me of my horrible mistake trusting the scam artists at TechSkills. I demanded an investigation from the Attorney General but that never happened so they continue to scam their students.

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