FRANKFORT — Attorney General Jack Conway on Wednesday sued Daymar College, a private, for-profit "career college," alleging that it uses deceptive tactics and cheats students on textbook sales, federal financial aid and the quality of their educations.
Daymar College enrolls students who don't meet its own admission standards, leading many to fail and end up with unrecoverable student loan debt, Conway said. Even if students complete their coursework and attempt to transfer, most Kentucky colleges won't accept Daymar College credits, something the school neglects to tell its students, he said.
"What we are seeing is very aggressive recruiting tactics where not all of the facts are put before the students so they can make an informed choice," Conway said at a news conference.
Citing thousands of potential violations of state consumer protection law, Conway is asking in Daviess Circuit Court for damages and restitution that could reach $10 million or more.
For example, roughly 5,000 students were allegedly forced to buy new textbooks from Daymar College's bookstores, usually at marked-up prices and using their financial aid, rather than being able to purchase used books or look for better deals on the open market, Conway said.
The school ordered its employees to conceal the textbooks' unique identification numbers until they were sold, making it difficult for students to find less costly alternatives elsewhere, he said.
Daymar Colleges Group, based in Owensboro, is owned by brothers Mark and Damien Gabis. As Daymar College, it has more than a dozen locations in Western Kentucky, Ohio and Indiana; as Daymar Institute, it has three locations in Tennessee. It offers two-year and four-year degrees in a variety of fields, including criminal justice, graphic design, health care administration and paralegal studies, with tuition, fees and supplies that can top $34,000 a year.
Mark Gabis, president of Daymar College, also is named by Conway as a defendant in the suit. Gabis did not return a call Wednesday seeking comment. Until earlier this year, Gabis was chairman of the Kentucky State Board of Proprietary Education, which is responsible for regulating for-profit colleges and safeguarding their students.
A state audit in April sharply criticized the board, calling it an inattentive watchdog. As designed by the legislature, voting control of the board rests with for-profit colleges.
Wednesday's lawsuit is the first visible result of Conway's ongoing investigation into the for-profit college industry in Kentucky, which began last winter and is continuing. However, Conway said his investigators started examining Daymar College even earlier, in 2008, after they received complaints about the school.
Apart from Conway's lawsuit, Daymar College is being sued in U.S. District Court by more than 140 current and former students who allege they were cheated out of educations they paid for and wound up deep in debt.
According to the U.S. Department of Education, Daymar College produces some of Kentucky's highest default rates for federal student loans. At its Paducah campus, for example, one in three students defaults on loans within three years of the first payment coming due.
The college's Kentucky locations collected more than $15 million in federal financial aid in the 2008-09 school year, including government-backed loans and Pell Grants, according to the Education Department.
At some for-profit colleges, up to 90 percent of revenue comes from federal financial aid, Conway said. The "point of sale" — getting a student to sign over a check — becomes their chief motivation, he said.
"We're seeing schools that seem more enthusiastic about accessing federal dollars than they are educating students," he said.
In his suit, Conway alleges that some Daymar College faculty and programs don't meet the standards of the school's accrediting organizations. Also, he said, the school does not adequately disclose information about its costs, and it has restricted students' access to their own financial aid funds, holding their money and directing how they spend it.