Sadly, and with more than a bit of embarrassment, I worked for a few of these 'diploma mills' - - - and know that they are bound by a legal statute known as the '70-30 rule'. ONLY (lol) 70% of the funding can be government subsidized through loans and grants, the remaining 30% MUST be from 'paying' clients. This number is referred to in the source post - 70% being government assisted. A couple of these schools actually taught some real-world applicable skills and knowledge, but far too many were nothing more than 'suck 'em in, spit 'em out, let the lenders deal with collecting the funds already collected by the 'school' through grants and loans. Hell, one of the recruiters I knew actually 'worked' the bus station to solicit and sign-up people that had no real chance of completing the course, or even getting hired into any decent job related to the course of study (hence my real embarrassment and shame - but a job is a job - and I NEEDED the income I earned as an instructor - and a damned good one - using the training and skills I received from my service in the USAF from 1970 through 1976).
Seriously though, the only significant difference between the privately owned schools and the state owned colleges is that the privately owned schools PROMISED a 'great career opportunity' with their associate degree program. In other words, they were guilty of ACTIVE solicitation of their student body, and were never really held accountable for the actual job placement statistics of their graduates. The legal 'weasel' term is the word __OPPORTUNITY__, and was used to justify the lack of job placement effectiveness because it was just an OPPORTUNITY, even though the promotional material APPEARED to PROMISE this type of career advancement - but was really falling back on the legality of the word OPPORTUNITY ! THIS is NO DIFFERENT from state colleges - with the ONE BIG ISSUE of ACTIVE RECRUITMENT promising great careers (opportunity) if they would just sign on the dotted line for their 'government loan' debt.
BECAUSE these types of privately owned schools drained the market of students from the student-body pool the state owned colleges wanted, they (the state owned colleges) continuously fought tooth-and-nail to keep accreditation and acceptance from being granted to the private schools, and consistently refused to honor credits earned from the private schools - for one reason - TUITION FEE$ - and the state / federal lockin on the educational system.
I saw the result of a school failing (in the mid 1990's) . . . and the totally WRONG actions of the lending agencies, who held the student liable for their loans, even though the school didn't exist, nor was there anything the poor students could do about it, since they had signed the loan agreement papers WITHOUT a bail-out clause to release them from their debt in case of the school going tits-up !
Now, for the realistic view, we can see that community colleges are - BY FAR - the cheapest and most effective path for obtaining an Associate degree, which is USUALLY accepted by most colleges/universities for advanced placement towards a Bachelor's degree program. All it takes is a phone call to the local 4-year colleges to identify the courses that WILL transfer towards a Bachelor's degree.