New Jersey to Probe Fraud at For-Profit Colleges If U.S. Doesn't

(Bloomberg) -- Reports that the U.S. Department of Education is quietly shutting down investigations into possible fraud committed by for-profit colleges caught the attention of New Jersey’s new Democratic attorney general, who offered to finish the probes himself if the agency won’t.

Gurbir Grewal, confirmed in January as the state’s top law-enforcement officer, said in a May 17 letter to Secretary of Education Betsy DeVos that he’d be willing to take over investigations the agency "shuts down prematurely" and asked for access to the department’s files.

The letter, a copy of which was posted online, cites recent reports that the department has “effectively killed” investigations into possible fraud at several large for-profit colleges and restricted communications about the probes between the agency’s staff and state attorneys general.

Grewal was appointed by Democratic Governor Phil Murphy, who took office in January after eight years of Republican control. The letter is the latest indication that he has joined a group of Democratic attorneys general who are challenging President Donald Trump’s agenda on multiple fronts, including immigration and environmental policies.

The Department of Education didn’t immediately respond to a request for comment. Michael Dakduk, an executive director at Career Education Colleges and Universities, an industry trade group, didn’t immediately return a call.

FTC Case

Under DeVos’s leadership, the department has hired a former DeVry University dean to handle the probes into fraud at for-profit colleges, the New York Times reported this week. That didn’t sit well with critics who noted that DeVry Education Group Inc., now called Adtalem Global Education Inc., agreed to pay $100 million in 2016 to settle a Federal Trade Commission case alleging false job-placement claims.

Former President Barack Obama’s administration probed whether some for-profit universities, which depend largely on government funds in the form of federal student loans, Pell grants and the G.I. bill., used false job-placement claims to lure in students. That left thousands of graduates with often-useless degrees and steep debt on student loans.

Separately, the company controlled by then-President-elect Donald Trump agreed in November 2016 to pay $25 million to settle lawsuits alleging that Trump University, a for-profit education venture, used high-pressure sales tactics and unqualified instructors. That probe was led by former New York Attorney General Eric Schneiderman, who clashed bitterly with the president over an investigation started in 2013. Schneiderman resigned this month amid allegations he assaulted women.

New Jersey and the Education Department previously collaborated to get relief for students who enrolled in programs run by Corinthian Colleges Inc., which misrepresented job placement rates to enrolled and prospective students, according to Grewal. In a statement, he said he "holds out hope for the Department of Education to counter any perception it has abdicated its anti-fraud role."

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