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California should focus its oversight of the state's private college industry on only those schools that raise red flags or have a history of student complaints, a new report by the Legislative Analyst's Office recommends.

Such an approach would free up resources to meet the workload created by a federal rule taking effect next July requiring private post-secondary colleges to get state authorization if they want to participate in federal student aid programs, aaccording to the LAO report.

In addition, the report said, the state should extend its oversight to cover online schools based outside California. Those schools currently operate without state review and often with no accreditation.

A 2009 state law that overhauled the state's fragmented-to-nonexistent oversight of for-profit colleges created a Bureau for Private Postsecondary Education. Under the law, the bureau licenses institutions that have no accreditation or are accredited by national or specialty agencies.

But the LAO said the bureau should leave review of schools' education quality to accreditation groups. The bureau instead should stick to the potentially bigger problems of schools ripping off students and conducting questionable business practices, such as deceptive marketing.

"In short, under the revised oversight system, the Bureau generally would conduct inspections for low-risk accredited institutions only when triggered by complaints, poor performance, or other factors, while dedicating the bulk of its compliance resources
to the remaining, highest-risk accredited and unaccredited institutions," the LAO wrote, summing up its suggestions.

About 11 percent of the 3.7 million California students attending college go to for-profit schools. The schools have long been the subject of debate in the Capitol. Supporters say they offer a way for students to learn valuable vocational skills and avoid long wait lists at community colleges. Critics, though, allege that some of the schools have misleading pitches, high costs, and poor student outcomes.

The 2009 law exempted from state licensing the 150 schools accredited by regional agencies. Those schools educate about one-half of all students attending private schools, according to the LAO.

But starting in July 2014, the U.S. Department of Education requires all for-profit schools participating in federal student aid programs — including those accredited by regional agencies — to be authorized by the state in which they are located and have a student complaint process in place.

Some large schools, the University of Phoenix and DeVry University, already have agreed to bureau oversight to comply with the new federal rules.

PHOTO: Legislative Analyst Mac Taylor. The Sacramento Bee/Hector Amezcua


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