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Trump’s For-Profit College Said to Be Probed by Schneiderman

May 20 (Bloomberg) -- New York State Attorney General Eric Schneiderman’s office subpoenaed a for-profit school founded by Donald J. Trump in a probe of its business practices, a person familiar with investigation said.

The Trump Entrepreneur Initiative is one of five schools being examined by Schneiderman’s office, said the person, who requested anonymity because the investigations haven’t yet been made public.

For-profit colleges’ marketing practices, job-placement claims and student loan default rates also are being studied by the U.S. government and Illinois and Florida attorneys general.

“Like many in this business, we have received an inquiry from the State of New York,” the Trump school said in a statement. “We look forward to cooperating with the inquiry and providing the information requested.”

The other for-profit school operators being studied by Schneiderman are Career Education Corp. of Schaumburg, Illinois; Santa Ana, California-based Corinthian Colleges Inc.; Bridgepoint Education Inc. of San Diego; and Lincoln Educational Services Corp., based in West Orange, New Jersey, according to the person.

Danny Kanner, a spokesman for Schneiderman, declined to comment.

Enrollment Increase

For-profit college enrollment has increased 236 percent in the past 10 years, U.S. Senator Dick Durbin of Illinois said at a public hearing in Chicago on April 28. Ninety-seven percent of enrollees in the colleges’ two-year programs borrow money for tuition, compared with 14 percent at public community colleges, he said.

“That might be a good investment if students were receiving education and job training to take the next step up the economic ladder. There are certainly many for-profit schools that do just that,” the senator said. “But there are also for-profit schools that are leaving students poorly trained and over their heads in debt.”

One quarter of those attending for-profit schools will default on those loans within the first three years of starting repayment, Durbin said, compared with 11 percent in public colleges and 8 percent in private, non-profit schools.

“We received an inquiry today and obviously we will cooperate,” Kent Jenkins, a spokesman for Corinthian Colleges, said yesterday.

The company, with more than 120 campuses in 26 states and the Canadian province of Ontario, has one campus in New York, he said. It also has an on-line division.

Bridgepoint Subpoena

Bridgepoint disclosed its receipt of a subpoena from Schneiderman’s office in a U.S. Securities and Exchange Commission filing yesterday, the company said in an e-mailed statement.

“We intend to evaluate and comply with the attorney general’s request,” Bridgepoint said in the statement.

Mark Spencer, a spokesman for Career Education, declined to comment. Lincoln Education Chief Financial Officer Cesar Ribeiro also didn’t reply to a voice-mail message left at his office after regular business hours yesterday.

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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