Diane, I agree with your assessment. What I would add to this would be to set the expectation from the moment they walk in the door to enroll to your school. This includes admissions, financial aid, and education to reiterate that the expectation is to complete all work for all courses in a timely manner.

I think this is a two-fold issue. I think the first thing is you should report it to your campus president (assuming they weren't the one directing you to do that). Also, what's best for the industry is to report this to the Ohio board of Career Colleges and Schools. There will be ramnifications for the school, but if your intent is to truly do what's best for the student/school/industry, there is no other option.