AG Grewal to U.S. Education Secretary: New Jersey Will Investigate For-Profit Colleges if Feds Won't – State Offers to Take Over Investigations into Fraud by Educational Institutions

TRENTON – Voicing concern over an apparent decline in federal efforts to combat fraud committed by for-profit educational institutions, Attorney General Gurbir S. Grewal has written the U.S. Department of Education offering to take over any investigation the federal agency shuts down prematurely.

In a letter sent Thursday to U.S. Education Secretary Betsy DeVos, the Attorney General references recent reports that the Department of Education has “effectively killed” investigations into possibly fraudulent activities at several large for-profit colleges, and is restricting communications between its staff and state Attorneys General with regard to those investigations.

Attorney General Grewal’s letter asserts that “students and taxpayers alike are harmed when educational institutions fail to deliver what they advertise,” and expresses disappointment that a once-productive working relationship between federal education officials and state Attorneys General appears to be dissolving.

“If the federal government will not pursue these investigations wherever the facts and the law take them, let us pick up where you leave off,” writes the Attorney General. “Give the New Jersey Attorney General’s Office access to your Department’s files.”

In his letter, Attorney General Grewal holds out hope for the Department of Education to counter any perception it has abdicated its anti-fraud role by “working with my office to ensure that any investigations of fraudulent activities by educational institutions are completed properly, rather than ended prematurely or allowed to grow dormant.”

The Attorney General reminds DeVos that New Jersey and the Department previously collaborated to provide relief to students who enrolled in programs run by Corinthian Colleges, Inc., which misrepresented job placement rates to enrolled and prospective students. Approximately 2,200 New Jersey residents were determined to be eligible for federal student loan debt cancellation as a result, but not all of the students have taken advantage of the relief available to them.

According to Grewal’s letter, student loans are now the second-largest form of debt for American households, overtaking auto loans and on pace to overtake mortgages.

“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,” the Attorney General writes.

Among the state-level anti-fraud investigations New Jersey has conducted or partnered in were two separate but related multi-state settlements with Pittsburgh-based Education Management Corporation (EDMC), one of the nation’s largest for-profit higher education providers. The first settlement resolved consumer fraud allegations. The second settlement resolved allegations that the company provided unlawful financial incentives to members of its recruiting staff in violation of Title IV of the federal Higher Education Act. As a result of the multi-state investigation, EDMC forgave nearly $1.3 million in student loan debt held by 1,000 New Jersey students.

Grewal concludes his letter to the Education Secretary by urging that New Jersey and the federal Department of Education “begin reviving our past cooperation.”

The Attorney General notes that the Department reportedly has (or had) several fraud investigations focused on for-profit colleges under way, and suggests that New Jersey and the Department “partner” in order to bring those investigations to completion. In the alternative, Grewal suggests letting New Jersey access the Department’s files and take over the unfinished fraud investigations.

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