For-profit colleges raking in GI Bill funds

Iraq and Afghanistan veterans have flocked to for-profit colleges in recent years, including a troubled chain that is closing and selling its campuses amid a series of federal and state investigations.

A report released last week by Sen. Tom Harkin, D-Iowa, chair of the Senate Health, Education, Labor and Pensions (HELP) committee, found that for-profit colleges received $1.7 billion in Post-9/11 GI Bill benefits during the 2012-2013 school year. That represents more than 40 percent of the total $4.17 billion in benefits paid out during that time.

In the most generous update since the original GI Bill was passed in 1944, the Post-9/11 GI Bill provides benefits for both veterans and members of their immediate families. To receive the full benefit, service members must have served at least three years of active duty since Sept. 10, 2001.

Among the top 10 schools receiving GI Bill funds, eight were from the for-profit sector. One was Corinthian Colleges, which recently reached an agreement with the Education Department to sell or close its more than 90 U.S. campuses. The Education Department said its concerns about the chain’s operations include allegations of falsifying job placement data used in marketing to prospective students, and allegations of altered grades and attendance records.

Including Corinthian, which is not a Christian college, the report finds that seven of the eight for-profit companies face investigations by state attorneys general or federal agencies for “deceptive and misleading recruiting” or other possible federal violations. Even as overall enrollment at the eight schools decreased since 2009, the government says the number of veterans enrolled at the schools increased.

For-profit colleges are popular among veterans partly because of offerings in skilled trades and flexibility such as online classes.

“It is no surprise that members of the military choose our institutions because we provide them with career-focused programs, important support services, and flexibility they need to complete their education,” Michael Dakduk, the vice president for military and veterans affairs with the Association of Private Sector Colleges, said in a statement.

But the for-profit sector has among the highest student loan default rates and lowest graduation rates in higher education. For-profit tuition is also generally higher than tuition at public institutions. The HELP report shows the average cost for a veteran to attend a for-profit college is about twice that of a public college—$7,972 per semester compared to $3,914.

Part of the reason veterans are so attractive to for-profit colleges is that they don’t count toward the “90/10” rule that requires all colleges to receive at least 10 percent of their revenue from sources other than the federal government. Due to a loophole in the law, students using the new GI Bill aren’t classified as using federal funds, so veterans are aggressively targeted by the for-profit industry.

In 2011, Hollister Petraeus, of the Consumer Financial Protection Bureau, said the loophole in the 90/10 rule, “creates an incentive to see service members as nothing more than dollar signs in uniforms, and to use some very unscrupulous marketing techniques to draw them in,” according to the HELP report.

The Associated Press contributed to this report.