Are For-Profit Colleges Selling A ‘Bill’ of Goods?

Career College Central Summary:

  • Designed to help World War II veterans get a college diploma, the GI Bill of 1944 provided low-cost tuition loans for service members, subsidizing their education and giving them a leg up on entering the American middle class.
  • But an unreleased Department of Education study found that a loophole in the bill’s updated version has subsidized the for-profit college industry instead, enabling it to rake in billions of taxpayer dollars each year by preying on members of the military.
  • The largest school in the industry, according to the study, pocketed $2.9 billion in federal student loans last year but had a graduation rate among veterans of just 15 percent.
  • Yet repeated attempts to close the loophole on Capitol Hill end up going nowhere, in part because of the industry’s financial and lobbying clout.
  • At issue is the “90/10 rule,” a federal law that prohibits for-profit schools from getting government funding if more than 90 percent of their revenue comes from federal student aid programs like Pell Grants and Stafford Loans.
  • But the rule didn’t include education benefits or funds from the new Post-9/11 GI Bill, and money from those programs don’t count against the 90 percent revenue clause.
  • Because of that loophole, for-profit colleges “now have no legal obligation to include Defense Department and VA money in their 90 / 10 calculations,” said David Halperin, a higher-education analyst for the Republic Report a website investigating the influence of money on public policy.
  • Yet the numbers alone, he said, “do show how heavily dependent these schools are on taxpayer dollars.”

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