A study was undertaken of proprietary school oversight and regulation in order to seek ways to improve state oversight of the proprietary sector. Twenty states participated in the study which used questionnaires sent to key state contact persons, telephone interviews conducted primarily with persons who had received the questionnaires and documents submitted by questionnaire filers and interviewees. The study found several principles upon which to base strengthened state licensing reform: license to operate a postsecondary institution must be conditioned on a reasonable expectation of business viability and success; in the event of school closure or failure, students must be financially protected and given the opportunity to complete their program of study; the state role in oversight and regulation involves assuring both consumer protection and educational quality; state financial support for licensing standards must be adequate to ensure proper enforcement; standards must be fair and equally applied, and coordination and consolidation of state licensing should be implemented to the greatest extent possible. Appendixes contain summary results, a copy of the questionnaire, a list of participants, and examples of current regulation from five states. (JB)