The walls are closing in on Decker College, a for-profit institution based in Kentucky and partially owned by William Weld, a gubernatorial candidate in New York.
On Wednesday, Kentucky's attorney general, Greg Stumbo, announced  that his office would investigate whether Decker -- which has operated a business program at its main campus in Louisville and construction schools in Louisville, Atlanta, Indianapolis, and Jacksonville, Fla. -- engaged in "false, misleading or deceptive practices" under the state's Consumer Protection Act.
Stumbo said he had been asked to investigate by the state's Board for Proprietary Education, following lawsuits by students accusing the college of misrepresenting itself. "I am determined to ensure that Kentuckians who want to improve their job skills are treated fairly,” Stumbo said. “People who invest money in their futures deserve to have those futures protected."
The attorney general's action follows by several days a decision by the U.S. Education Department to end Decker's participation in federal student aid programs. In a September 30 letter to Weld, Robin S. Minor, director of the School Participation Management Division of the department's Federal Student Aid office, said the institution had failed to comply with federal financial aid rules and breached its "fiduciary duty" to the federal government in "very severe" ways.
According to the department's letter, Decker:
- Offered its associate applied science degree in construction crafts -- in which a majority of its students are enrolled -- primarily in an online format even though it was not accredited by the Council on Occupational Education to do so.
- Failed to return $7 million in federal Pell Grant and loan funds that it owed to the department because students had dropped out partway through a term.
- Received federally guaranteed loan funds on behalf of its students without prior approval from the Education Department, despite having been prohibited from doing that because of previous restrictions on its eligibility.
Because of those breaches, the department said, Decker is ineligible to participate in the federal student aid programs, including the Pell Grant and guaranteed loan programs, as of September 30.
The inability to award federal student aid is often the death knell for colleges. Decker has already wilted under the recent scrutiny, closing most of its branch campuses and ceasing to pay many of their employees last month.
Weld's investment firm, Leeds Weld, which he founded after leaving the governor's office in Massachusetts and invests heavily in for-profit higher education, is a minority investor in Decker. Weld's involvement with the college has become a minor issue in the New York gubernatorial campaign.
A spokeswoman at Leeds Weld referred calls to Mark Stein, the chief financial officer at Decker. Stein did not return telephone calls seeking comment.