For-Profit Schools Bank $521M Off Veterans' G.I. Bill Benefits
The growing question around for-profit schools' shameless profiteering may soon be: who aren't they willing to exploit? Poor, underserved populations, check. Which end up being disproportionately made up of people of color, check. The homeless and unemployed, check. The military? Got them too. A new report released today by Sen. Tom Harkin's Senate Health, Education, Labor and Pensions Committee details exactly how for-profit schools have taken advantage of veterans' benefits and loopholes in their federal regulations to scoop up the many vets coming home from wars abroad to boost enrollment.
Veterans have been a boon to for-profit schools--their increased military benefits have made service members especially attractive prospective clients. "Between 2009 and 2010 alone, revenue from military educational benefits at 20 for-profit education companies increased 211 percent," said the report. In the last four years, 20 for-profit schools saw their income from VA and Department of Defense benefits skyrocket--from $66.6 million in 2006 to $521.2 million in 2010, a 683 percent inrease.
"Congress may have unintentionally subjected this new generation of veterans to the worst excesses of the for-profit industry: manipulative and misleading marketing campaigns, educational programs far more expensive than comparable public or nonprofit programs, and a lack of needed services."
Federal regulations bar for-profit schools from receiving more than 90 percent of their revenue from federal student loans and grants. Many schools are already perilously close to maxing out there. But money from the G.I. Bill and other VA benefits aren't considered federal student aid, which has allowed them to fully exploit the newly expanded benefits.
The Huffington Post'sChris Kirkham tells the story of one vet:
In July 2009, [Roger Betancourt] enrolled at Kaplan University online, after being recruited heavily by an academic advisor specializing in military recruitment. Betancourt said he was skeptical at first, especially because he hadn't been able to discuss the funding with the Department of Veterans Affairs. "It was a very aggressive process," said Betancourt, now 28. "I felt a lot of pressure, to the point where I felt like I was buying a car. Like they were trying to sell me a Mustang and I just wanted to buy a truck." After the recruiter called his wife, Betancourt said he eventually decided to enroll, trusting the recruiter's word that all VA issues had been resolved. Less than two months later, he heard from the VA that his paperwork was not in order. He was not yet eligible for the benefits, and he had $2,300 in outstanding charges from Kaplan. Unable to pay off the bill, he was locked out of classes and is now working two jobs to get the charges off his credit report.
For-profit schools don't limit their aggressive recruiting and shady tactics to just vets, as a separate federal investigation found earlier this year.
It's not that for-profit schools in and of themselves are bad. They provide educational opportunities and training for students who've often been locked out of public higher education. But their bottom line is about profit--students' long-term job prospects, welfare and financial solvency be damned. They're facing strict regulation because 40 percentof for-profit schools' students eventually default on their loans, which are often tens of thousands of dollars higher than students' debt levels from nonprofit state and community schools. Because just 22 percentof students graduate from for-profit school programs--the national average for higher education programs is 57 percent.