13 States Expand For-Profit Education Investigations

January 28, 2014 AT 10:20 AM

Thirteen states are stepping up an investigation into the for-profit education industry, demanding documents from four colleges about financing and recruitment practices.

State attorneys general sent subpoenas last week to Career Education Corp., Education Management Corp., Corinthian Colleges Inc. and ITT Educational Services Inc., said a spokesman for Jack Conway, Kentucky's Democratic attorney general who is leading the effort.

The states are focused on representations made by the colleges to prospective students about graduates' employment rates and student loans, according to Mr. Conway's office and regulatory filings.

The effort comes as federal and state officials closely scrutinize the for-profit education business, which receives about $30 billion a year in taxpayer-funded federal loans and grants.

Critics, including many Democratic lawmakers, say the companies exaggerate graduates' earning potential and don't fully inform students of the potential burden of student loans.

The colleges defend their track record, saying students are told about loan terms and warned that graduation doesn't guarantee employment.

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