Do for-profit schools pass the test? The growing popularity and criticism of these universities have caught lawmakers' attention.

• Author: Liu, Michelle Camacho
• Position: SPECIAL REPORT

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Undercover investigations, congressional hearings, advertising campaigns, lawsuits, blocked funding, new federal regulations, public service announcements, and too many newspaper opinion pieces to count. For-profit colleges and universities are clearly in the spotlight.

Today these institutions enroll some 3.2 million people in everything from small vocational programs to traditional degree programs, with flexible schedules and online options.

Budget cuts to state and community colleges that have triggered higher tuition, larger classes and limited class selection in states across the country make for-profit colleges increasingly attractive to nontraditional students looking for programs that better meet their needs.

The popularity of these proprietary schools grew from a mere 2 percent of students in 1986 to more than 10 percent in the 2008-2009 school year. But this growth has raised concerns--at both the state and federal levels--about the quality of education these institutions offer, the amount of money in scholarships and loans they receive, the tactics they use to attract students and the success of their graduates in finding jobs.

Lawmakers in 18 states have considered at least 30 bills this year, many of which would increase oversight and regulation, as well as establish additional consumer protections. So far, seven of these bills have become law, with provisions varying from restricting recruiting practices to requiring schools to pay into a student protection fund, to limiting eligibility of state student aid programs.

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States should ensure that "students know, with clear definition, the expectations placed on them and those placed on the institution," says Minnesota Representative Peggy Scott, who introduced a bill to research graduate education in the for-profit sector.

Officials at the U.S. Department of Education also have concerns. "For-profit institutions can and should be important contributors" in reaching President Obama's goal of having the highest proportion of college graduates in the world by 2020, says James Kvaal, deputy undersecretary at the department. "They have been innovative pioneers in delivering online education, and thoughtful of meeting the needs of older students, parents, and others who are not on the traditional academic calendar."

There are, however, concerns about disproportionately high default rates, student loan debt and questionable recruiting practices at these institutions, he says, coupled with substantial growth in federal grants and loans. "It is incumbent on us to make sure every penny is well spent," Kvaal says. "Our view is we need to strike the right balance to make sure the strengths of the sector are enhanced while making sure students are not being taken advantage of."

An executive with the organization that...