Military in Hampton Roads Feeds Boom in For-profit Schools

After an honorable discharge from the Navy, Tyson Randolph decided to attend college on the new GI Bill. He looked at four local schools with long histories, but in the end he opted for a relative newcomer to the Hampton Roads higher-education scene: South University.

In a region long served by public colleges and brick-and-mortar private schools, for-profit schools like South are quickly gaining ground. Several big-name national schools have opened up satellite campuses in recent years.

The University of Phoenix staked its claim on a corner of Town Center in Virginia Beach in 2009. In 2010, The Art Institute of Virginia Beach began training students just around the corner. A few months later, South University moved into an office building blocks away. Today, more than 20 private for-profit schools operate in Hampton Roads. Ten are within five miles of Town Center. Classes at Kaplan College in Chesapeake began Wednesday.

These privately owned schools, some of them publicly traded, cater to people with busy lifestyles, sometimes with online courses. While the schools are helping more Americans gain access to higher education, questions about their costs and quality have made them targets of federal investigations and lawsuits in recent years.

What’s bringing them here?

A population of military veterans armed with generous education benefits through the new Post-9/11 GI Bill has been a factor, officials from the schools and experts said.

According to the U.S. Department of Veterans Affairs, for-profit schools ranked among the top recipients of the Post-9/11 GI Bill benefits last year. The University of Phoenix topped all other schools, receiving $76 million out of $1.7 billion in veterans’ aid.

Kevin Kinser, an associate professor with the State University of New York at Albany, studies for-profit schools. "These institutions have positioned themselves as the option for working adults," he said. "And the military fits that to a ‘T.’ "

For-profit schools aren’t the only area schools benefiting from the GI Bill. Last year, Tidewater Community College had the fifth-largest number of GI Bill students in the country. ECPI College of Technology was 15th and Old Dominion University was 29th.

In Virginia, more than 63,700 students attended for-profit schools during the 2008- 09 school year, the latest year data was available from the U.S. Department of Education, up 70 percent from 2003- 04.

As enrollment has increased, so has scrutiny. Congress held hearings last year about aggressive marketing and heavy student debt-loads at these schools. Lawsuits in several states have raised concerns about the for-profit business. And the U.S. Department of Education recently released new rules restricting incentives to recruiters, increasing state oversight, and requiring more transparency about post-college job placement.

Many of the concerns stem from the schools’ heavy reliance on federal student aid. While 11 percent of students attend for-profit schools nationally, they accounted for 26 percent of all student loans, according to a report last year from the U.S. Department of Education.

Federal law caps how much these for-profits can rely on government aid at 90 percent of their revenue. Ten percent has to come from private and other sources. But veterans benefits, although provided by taxpayers, aren’t part of the 90 percent calculation.

The Post-9/11 GI Bill expanded education opportunities to veterans. Reserve troops, and more spouses and children, now qualify for the educational benefits.

Donald Overton, executive director of Veterans of Modern Warfare, a private veterans’ advocacy group, said veterans may be burning through their educational benefits without getting a quality education.

"We see it as a good opportunity," Overton said of the benefits. "Hopefully, we don’t just create great profits for companies."

Harris Miller, president of the Association of Private Sector Colleges and Universities, a trade group for the for-profit industry, said the schools are a more natural fit for veterans. "They are focused on just the education, not all the frills," he said. "They’re older. They’re not interested in how to date or how to drink beer, they’ve already done that in the military."

The VA is aware of concerns raised by Congress about for-profit schools, said Kerry Meeker, a spokeswoman for the agency. Despite millions spent on tuition at the schools, the VA doesn’t know how many veterans graduate and find employment. Meeker said the VA is developing a system to track such outcomes.

Some schools’ recruiting tactics have been criticized. An undercover investigation of 15 for-profit colleges by the federal Government Accountability Office last summer found that some gave false financial aid and loan information to students and exaggerated the post-graduation earning potential. The investigation also found that some recruiters made repeated calls to students as late as 11 p.m.

For-profit schools have questioned the validity of the report, and a coalition has sued the GAO. The GAO did soften some of its findings three months ago and revised its examples of misleading behavior by the schools. But the office stood by the overall conclusions of the report.

Miller said the report is "non-credible."

"They misinterpreted some of the comments," Miller said.

For some students, repeated phone calls aren’t aggressive, but encouraging.

LaShay Clements, a Norfolk resident and University of Phoenix student, said she welcomes the weekly calls she receives from her enrollment and financial counselor to make sure she’s still motivated.

"That made a difference," Clements said.

Tyson Randolph said he chose South University for similar reasons.

"They were so willing to help me out and make sure it was the best fit; the counselor wanted to know what I wanted," he said. "To me, that was the best thing, I wasn’t just another number."

Satisfaction among students is usually high, said Kinser, the professor who studies for-profits.

But that doesn’t always lead to post-graduation success, he said.

Some students who attend for-profits are saddled with significant debt. According to the federal Education Department, the median debt-load for a student earning an associate’s degree at a for-profit school is $14,000. Most students attending community colleges don’t borrow money, according to the department.

More for-profit students borrow because the schools serve those with less money, including many who are the first-ever in their families to attend college, Miller said.

"We do a much better job of working with at-risk students," Miller said.

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