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For-profit colleges gouging veterans, U.S. Senate report finds

— On the heels of a student veterans group’s warning, a U.S. Senate report reveals the extent to which for-profit universities benefit from the federal G.I. Bill program.

For-profit schools received $1.7 billion in veterans’ benefits during the 2012-13 academic year, 41 percent of all G.I. Bill dollars and almost as much as the cost of the entire program just four years earlier, according to the majority report of the Senate Health, Education, Labor and Pensions Committee released July 30.

While overall enrollment at for-profits has declined nationally, enrollment of veterans in those schools has soared — from 61 percent to as much as 657 percent at the eight top for-profit G.I. Bill beneficiaries. Those eight schools received 23 percent of all G.I. Bill benefits last academic year.

“More and more veterans are enrolling in high-cost for-profit programs of questionable quality, while the share of veterans enrolling in community colleges and state universities is shrinking,” said Sen. Tom Harkin, a Democrat from Iowa and chairman of the committee that has been investigating for-profits.

Although the G.I. Bill “was designed to expand educational opportunities for our veterans and service members, I am concerned that it is primarily expanding the coffers of the big corporations running these schools,” Harkin said in a statement accompanying the release of the report.

The Post-9/11 Veterans Education Assistance Act of 2008, also known as the Post-9/11 G.I. Bill, provides all veterans who serve a minimum of 90 days active duty up to $19,200 a year in education benefits for four years.

Seven schools among the eight top recipients of G.I. Bill benefits are under investigation by state attorneys general and/or federal agencies for deceptive and misleading recruiting practices and for tactics such as unlawfully displaying the official seals of military departments as if they were endorsed by the branch.

Last month, Student Veterans of America created a “Not Recommended” list of colleges, and its debut members were the Corinthian Corp. for-profit colleges, including four Everest University campuses in the Tampa Bay area.

The Corinthian schools are either for sale or being shut down in a settlement with the federal government, but Student Veterans of America said the schools were actively recruiting on military bases.

“Anybody that would target and try to scam veterans, I think it’s morally reprehensible. But I know it happens,” said Larry Braue, director of veterans’ services at the University of South Florida.

The situation is markedly different at USF, which has been named the fifth-friendliest school in the nation for veterans by Military Times magazine.

Braue said his department counsels students on managing their G.I. Bill money, helps them monitor student debt and teaches them financial literacy.

“We start to address that question the minute they walk in the door,” Braue said. “That’s something we’ve really, really been hot on, because we have seen just too many veterans run out of benefits and end up never getting a degree.”

That sort of guidance isn’t the norm at many of the for-profit schools.

The Veterans’ Student Loan Relief Fund, which tries to help student veterans dig out from under debt they incurred at for-profit education companies, recently awarded a $5,000 grant to a Pensacola veteran who had racked up $73,000 in student debt at American Intercontinental University.

The report from Harkin’s committee suggests that the for-profits are targeting veterans because of what is known as the “90/10” requirement: Federal education funds can make up no more than 90 percent of a university’s revenue; at least 10 percent must come from other sources such as tuition paid out of pocket by students or parents.

G.I. Bill benefits are not counted in that 90 percent pot.

“By leaving open a loophole that allows Post-9/11 G.I. Bill funding to go unaccounted for, we are incentivizing for-profit education companies to aggressively market to and enroll veterans,” said Sen. Dick Durbin, a Democrat from Illinois, in a release accompanying the Senate report. “The results laid out in (the report) show that unfortunately these predatory tactics are working.”

Noah Black, a spokesman for the Association of Private Sector Colleges and Universities, denied that veterans were being targeted and said the 90/10 requirement had no impact on enrollment of veterans.

“The reason we have such strong enrollment is that there are more and more veterans every day,” Black said. “They are choosing our institutions because the type of education our schools are offering appeals to them right now.”

Durbin has filed legislation, co-sponsored by Harkin, that would close the 90/10 loophole. It would redefine G.I. Bill benefits as federal funds and shift the 90/10 percentage to 85/15.

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