To For-Profit Schools, Veterans Are 'Dollar Signs In Uniform'

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To For-Profit Schools, Veterans Are 'Dollar Signs In Uniform'

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Some colleges milk federal student aid

The 1944 GI bill helped catapult a generation of veterans into the middle class and beyond, financing the education of three future Supreme Court justices, three presidents and thousands of doctors and scientists while democratizing many of the nation's leading universities.

In 2008, Congress, figuring what worked once would work again, passed an expanded law that promised the same opportunity to the new generation of veterans who had served since 9/11.

But some of those GIs are seeing their opportunity squandered by for-profit colleges with low graduation rates, high costs and high loan default rates. In fact, their new benefits might be propping up some schools that otherwise would struggle to meet federal rules.

The failings of many for-profits — and the risks they pose for both students and taxpayers — have been widely publicized.

The average cost for tuition and fees at for-profits is $14,487, 76% higher than the price that the average in-state student pays to attend a public institution. Yet by just about every academic measure, the for-profits deliver results inferior to those at traditional schools.

At public universities that accept virtually all applicants, 31% of the students graduate within six years. The rate is nothing to brag about, but it beats the for-profits, where just 22% graduate. Students also withdraw at far higher rates —more than 50% at six of the schools most popular with veterans. Loan default rates are higher, an indication that students aren't faring well.

Still, veterans are flocking to the for-profits. Among the top 10 recipients of GI educational dollars in the 2010-11 school year were eight companies that run for-profit schools, led by Apollo, parent of the University of Phoenix. Why so popular? Online courses, flexible hours and, in some cases, an effective education.

Many schools also aggressively mine the lucrative veterans market. Veterans look like "dollar signs in uniforms" to predatory schools, Theodore Daywalt, CEO of VetJobs, told a Senate hearing last year. The reason? A loophole in a federal law meant to ensure that for-profit schools are solid enough to attract some students who pay their own way.

These schools are required to get at least 10% of their revenue from sources other than federal student grants and loans. The idea is sound. But in a bizarre twist, veterans benefits do not count as federal funds and can be used to plump up the non-federal 10%. The for-profits' trade association says many schools surpass the 10% threshold, but tellingly, it opposes raising the level to 15%.

Some schools also stretch the truth or worse. Thirteen of 15 colleges investigated by the Government Accountability Office gave agents posing as applicants questionable, even deceptive, pitches about graduation rates, guaranteed jobs or likely earnings.

This is a shoddy way to treat any student, and it's a dubious way to invest taxpayer money. It's just all the more offensive when applied to veterans. As Sen. Tom Harkin, D-Iowa, says, the GI benefit is a life-changing "one-time shot."

His legislation to plug the 10% loophole is a sensible response. But until for-profits improve or student aid rules are overhauled, veterans will need to look out for themselves.


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