(Washington, D.C.) The President’s fiscal year 2016 Budget released yesterday contained welcome news for the nation’s veterans, active-duty service members, and their families. It proposed closing a loophole that effectively made our military a target of for-profit college recruiters.
Since the enactment of the Post-9/11 GI Bill, for-profit colleges have aggressively and deceptively recruited the military, offering expensive but low-quality programs, as has been documented by several US Senate reports. Why target the military? By law, for-profit schools can’t receive more than 90 percent of their revenue from federal student aid, a statutory effort to ensure some modicum of quality by forcing schools to be good enough to attract private revenue. However, the GI Bill and Defense Department student aid were largely dormant and inadvertently left out of the law when it was written two decades ago. But the passage of the robust Post-9/11 GI Bill for the nation’s heroes returning from Iraq and Afghanistan opened up a new floodgate of federal funds, which for-profit colleges have aggressively pursued. For-profit colleges have chosen to abuse this “90/10 loophole,” counting the GI Bill and Defense Department student aid as “private dollars,” an accounting gimmick that two dozen state Attorneys General told Congress violates the intent of the law, if not the letter. Why pursue this loophole? Because for every $1 a for-profit school receives in GI Bill benefits, it can get $9 more in federal student aid.
“This accounting gimmick has put a dollar sign on the backs of America’s service members and veterans,” Carrie Wofford said. “It is time to put a stop to predatory for-profit colleges that seek to profiteer off the GI Bill.”
According to a 2014 analysis by the Department of Education, 133 schools received more than 90 percent of their 2012 revenue from the federal government when DOD and veteran educational benefits are part of the calculation, including the University of Phoenix. In fact, from 2009 through 2013, Phoenix received $751 million in revenue from veterans using their Post-9/11 benefits, more than any other school in the nation. Although Phoenix paid $155 million for the naming rights to the Cardinals stadium, site of the recent Super Bowl, the Senate Health, Education, Labor, and Pensions Committee reported that it only invested $892 per student per year on instruction in 2010. Veterans and taxpayers deserve better.
“For-profit colleges’ accounting gimmick put a dollar sign on the backs of America’s service members and veterans,” Carrie Wofford said. “We welcome the President’s proposal and encourage Congress to swiftly close the 90/10 loophole. Protecting our veterans and taxpayer dollars should be a bipartisan issue supported by both Democrats and Republicans alike.”
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Veterans Education Success is a non-profit organization dedicated to protecting veterans from predatory for-profit colleges and assisting veterans who have been deceived by predatory colleges. For more information, visit www.VeteransEducationSuccess.org.
Contact: Carrie Wofford 202/422-6338, Walter Ochinko, 202/657-1254