In a previous post, I wrote about the financial risks of choosing the wrong college. I noted recent research that shed light on the low graduation rates and huge loan debt that students risk when attending for-profit colleges. Attorney General Jack Conway of Kentucky has initiated a lawsuit against for-profit college, Daymar College, alleging that the school overcharged students for textbooks and mislead students about financial aid and credit hours. There are seven for-profit colleges under investigation for aggressive recruiting, high tuition, low rates of job placement, and misleading students about financial aid.

The suit further alleges that students were misled regarding their ability to transfer credits to other colleges and Daymar enrolled students who failed to meet its own admissions standards. Enrolling students is big business for for-profit colleges. During the 2009/10 school year, Daymar received over $11 million in federal Pell Grants, while having the second highest student default rate among Kentucky-based schools.