For-Profit Colleges Under Fire

A report released Thursday suggests that some for-profit colleges are taking advantage of U.S. military veterans and their taxpayer-funded education benefits.

Sen. Tom Harkin, D-Iowa, released an analysis of schools that receive money through the post-9/11 GI Bill.

Eight of the top 10 recipients are for-profit companies that have high one-year dropout rates, according to the report. Harkin is chairman of the Senate Health, Education, Labor and Pensions Committee.

"Over the last year, our HELP committee investigation has revealed that many of these subprime colleges focus on recruiting and enrolling students, with little concern for whether students succeed," Harkin said.

According to the report:

  • The eight for-profit schools collected $1 billion last year, or 24 percent of all benefits paid out through the program.
  • It costs taxpayers twice as much to send a veteran to a for-profit school than to a public university: $10,900 compared with $4,900.
  • For-profit schools collected 37 percent of all GI Bill funds but trained only 25 percent of veterans, while public colleges and universities received 40 percent of benefits but trained 59 percent of veterans.

Harkin noted that the new GI Bill was intended to help veterans who have served bravely in Iraq and Afghanistan. "Unfortunately," he said, "what we didn’t anticipate was that the for-profit sector, again eager to please their Wall Street investors, would go after this new funding aggressively, often in ways that are not in the best interests of veterans and service members."

Brian Moran, interim president of the Association of Private Sector Colleges and Universities, issued a statement in defense of the schools. Moran said private colleges cost more than public institutions because the private colleges don’t receive government subsidies.

"But these numbers show that the percentage cost per student of attending a public college or university has actually increased at a much higher rate than that at private sector colleges and universities," he said.

One issue identified by the senators is the so-called "90-10 rule," which prohibits universities from receiving more than 90 percent of their revenue from Title IV education funds, the main source of federal student aid.

The GI Bill benefits don’t count toward the 90 percent, which means schools have an incentive to sign up as many veterans as possible to help balance their ratios. It also means schools could theoretically be operating completely off federal funding.

Harkin and other senators have suggested altering the 90-10 rule to count GI Bill benefits on the federal funding side of the ledger and looking for other changes in the program’s incentives.

The current rules provide large incentives for schools to sign up veterans but little incentive to make sure they receive the knowledge and skills they need for a successful career.

Moran objected to tightening the rule: "The 90-10 restriction does nothing to measure quality outcomes and, by including military benefits in the 90 percent, places an unwarranted barrier in the way of students seeking a career-focused education."

Harkin made it clear that he and others will be looking into legislation on the subject.
He noted that the GI Bill funds represent a one-time benefit for veterans and said it’s tragic to see the benefit wasted.

"That’s not what we want for our veterans," Harkin said. "That’s not why we worked so hard to create this program."


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