A State Attorney General Calls Betsy DeVos on For-Profit Colleges

Posted May 17, 2018 7:26 p.m. EDT

The attorney general of New Jersey said Thursday that federal education officials had stopped cooperating on issues involving fraudulent activities at for-profit colleges, and requested that the Education Department renew its investigations into the institutions or hand them over to the state.

Gurbir S. Grewal, who became attorney general in January, expressed frustration with the officials in a letter to Betsy DeVos, the education secretary.

Grewal said they had ignored requests from New Jersey to work with the state on behalf of students who were defrauded by Corinthian Colleges, a bankrupt for-profit chain. And he raised concerns about the status of investigations by the Education Department into large for-profit institutions like the DeVry Education Group, which paid $100 million in 2016 to settle a lawsuit alleging that it misled prospective students with ads about employment and salaries after graduation.

In an article this week, The New York Times reported that a special investigations team at the Education Department created in the final year of the Obama administration had been unwound under the Trump administration, effectively killing inquiries into DeVry and other schools where top hires of DeVos previously worked.

“If the federal government continues to pursue these investigations, let us partner with you,” Grewal wrote, citing The Times’ article. “If the federal government will not pursue these investigations wherever the facts and law take them, let us pick up where you leave off.”

Grewal said in the letter that his office would protect the confidentiality of investigative files shared by the department. A person with knowledge of the New Jersey effort said that the attorney general’s office was also exploring other legal routes to obtain any federal files on the suspended investigations if DeVos did not make them available.

The Education Department did not immediately respond to a request for comment.

The special investigative team was created in 2016 after the collapse of Corinthian Colleges, which catalyzed a flurry of complaints from students about predatory activities at for-profit schools. The institutions had been accused of widespread fraud that involved misrepresenting enrollment benefits, job placement rates and program offerings, which could leave students with huge debts and no degrees.

The team expanded in the last months of the Obama administration to include a dozen or so lawyers and investigators, according to former and current employees of the department. Since President Donald Trump took office, the group has dwindled to three, and its mission has been scaled back to focus on processing student loan forgiveness applications and looking at smaller compliance cases.

“New Jersey is among the states whose residents carry the most student-loan debt, so we are acutely aware of the need to ensure that educational institutions keep their promises,” Grewal wrote in the letter.

Under the Obama administration, the group was investigating not only DeVry, now known as Adtalem Global Education, but also Bridgepoint Education and Career Education Corp., which also operate large for-profit schools.

The investigation into DeVry ground to a halt early last year. Later, in the summer, DeVos named Julian Schmoke, a former dean at DeVry, as the team’s new supervisor. Former employees of Bridgepoint and Career Education also work for DeVos, including Robert S. Eitel, her senior counselor, who worked for both, and Diane Auer Jones, a senior adviser on postsecondary education, who was with Career Education.

Last month, Congress confirmed the appointment of a lawyer who provided consulting services to Career Education, Carlos G. Muñiz, as the department’s general counsel. And Bridgepoint is a former client of Mercedes Schlapp, the director of strategic communications at the White House.