Bill filed to revamp oversight of some for-profit colleges

A state lawmaker wants to remove the supervision of some private, for-profit career colleges from a state agency dominated by the same people who run the colleges, citing a potential conflict of interest.

Rep. Reginald Meeks, D-Louisville, is sponsoring a bill to revamp the Kentucky State Board for Proprietary Education, which licenses 122 for-profit schools offering two-year associate's degrees, technical certificates or other diplomas in different career fields.

Meeks would transfer the board's oversight of seven two-year, for-profit colleges to the state's Council on Postsecondary Education.

Six of the board's 11 seats are filled by representatives of for-profit colleges, appointed by the governor. Board chairman Mark Gabis is president of Owensboro-based Daymar College, which is being sued in McCracken Circuit Court by a group of students who allege their educations left them in debt and were inadequate for them to get good jobs or transfer their credits to other schools.

The for-profit education industry has come under scrutiny recently by Congress and the states following complaints from students who say they went into debt — often using federally guaranteed financial aid —— without getting the educations or subsequent job placements the colleges had promised.

Kentucky Attorney General Jack Conway last month subpoenaed records from six for-profit colleges operating in Kentucky, seeking information about their student loan default rates, recruitment practices and job placements. Conway declined to identify the colleges.

In November and December, the legislature's Interim Joint Committee on Education held hearings on for-profit colleges. Students from for-profit schools complained of problems similar to those mentioned in the lawsuit against Daymar. Meeks, a committee member, said he left the hearings worried about the Board for Proprietary Education.

"It became clear there has not been the kind of oversight from this board that the public would demand," Meeks said Monday. "There has not been an audit of this board in many years. There are conflicts of interest in the board's membership. There are a number of key questions in critical areas."

A Daymar College spokesman said Monday that Gabis, who joined the board in 1999, declined to comment.

At the legislative committee's Dec. 6 hearing, Gabis told lawmakers the board meets once a month and reviews students' complaints, among its other duties. The board paid $15,000 in compensation claims to students during the past five years from a $500,000 student protection fund, Gabis said.

Meeks' bill would assign supervision of for-profit colleges that award two-year degrees to the Council on Postsecondary Education. The council already oversees public universities, the community and technical college system and all private colleges — for-profit and not-for-profit — that award four-year bachelor's degrees or higher.

"Bringing them under CPE puts them more in line with where our state universities are in terms of accountability," Meeks said.

The two-year, for-profit colleges include Spencerian College and MedTech College, both of which have Lexington campuses, according to the state Public Protection Cabinet. The cabinet provides the Board for Proprietary Education with staff.

The Council on Postsecondary Education could handle the new responsibility, although additional employees might be necessary, said its president, Robert King.

If the bill becomes law, the board will be left to supervise 115 for-profit schools that award less than two-year degrees, including those that teach massage, cake decorating, truck driving, dental assisting, welding and horseshoeing.

Meeks' bill also would change the board's membership, making a majority of seats independent of the for-profit educational industry. It would require for-profit colleges to publish data about student graduation rates and employment, and establish formal procedures for resolving students' complaints.

In July, the U.S. Department of Education proposed stricter rules for for-profit colleges. The rules would cut colleges' access to federal financial aid — which is a lifeline for many of them — unless their students are demonstrably prepared for "gainful employment" and able to repay student loans on time.

Gabis, on behalf of the Board for Proprietary Education, sent a letter Sept. 7 urging U.S. Education Secretary Arne Duncan to withdraw the proposal because it would cause serious financial harm to for-profit schools.

"Should these regulations take effect and programs be eliminated in the schools the board licenses, it will have a significant negative impact on jobs," Gabis wrote. "Jobs will be lost by instructors and administrators since fewer students would be attending classes."

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