FRANKFORT — The Interim Joint Committee on Licensing and Occupations heard Friday from state officials and representatives of the for-profit college industry, which is under attack nationally for some of its practices.
Attorney General Jack Conway said that the state needed to examine the practices of the proprietary colleges — which offer a variety of certificates, diplomas and degrees — because students at the colleges are increasingly using government grant money and student loans.
"Some have called this student loan bubble the next housing bubble," Conway said, noting that student loans are not dischargeable even for people who declare bankruptcy.
Conway's office is investigating seven for-profit colleges in the state for possible consumer violations. He revealed the names of two of them: National College and Brown-Mackie College.
National has six campuses in Kentucky, and Brown-Mackie has three. J. Stephen Dobbins, a spokesman for the Brown-Mackie schools, said he had no comment. Robert Dalton, vice president of government affairs for National, said the college would have no immediate comment.
The Attorney General's investigation, which began last December, comes amid national concern about the fast-growing for-profit college sector, which can cost students as much as six times what they pay for some public college programs. That sector might be misleading students, enrolling those who do not have adequate preparation and making unrealistic promises of future employment opportunities and earnings, various studies have shown.
Both National and Brown-Mackie have been mentioned in court and regulatory filings. The parent company of Brown-Mackie College, which has campuses in Northern Kentucky, Louisville and Hopkinsville, had mentioned Conway's investigation in a U.S. Securities and Exchange Commission filing.
National College, which has campuses in Lexington, Danville, Florence, Louisville, Pikeville and Richmond, has been battling Conway in Franklin Circuit Court, disputing his right to compel the company to release information. Conway won the first round, and the matter is now on appeal.
The five other schools under investigation have not been named.
Some committee members were critical of the tactics of the colleges, which acknowledge that they recruit heavily among Kentucky's poor and minority populations.
State Sen. Robin Webb, D-Grayson, said aspects of the colleges' recruiting seem predatory.
Dalton, however, said the for-profit colleges fill needed niches in Kentucky's higher education system, such as science, technology, engineering and math education, popularly called STEM.
He also said the for-profit sector has been a positive factor in building communities and providing employment statewide.
"This sector is a significant economic driver for the commonwealth," he said.
Gregory Brotzge, a spokesman for the Kentucky Association of Career Colleges and Schools, said the colleges want to work with the state. He recommended that the governing board, which now includes five public representatives and six college representatives, be changed to include a majority of public representatives.
Rep. Dennis Keene, D-Wilder, co-chairman of the committeee, had said earlier in the hearing that the board representation is tilted toward the very organizations it is supposed to regulate. "That's interesting, that they can oversee themselves so well," he said.
The for-profit colleges want to retain their national accreditation, the for-profit representatives said, dismissing contentions that regional accreditation would help the schools improve the transferability of their credits.
State auditor Crit Luallen told the committee that the state organization that oversees professional governing boards, including the state's proprietary education board, is trying to remedy some of the problems brought up in her recent report. Luallen said specifically that the reimbursement fund for students at for-profit colleges that end up closing needs attention.