News

DEFENSE DEPARTMENT PUTS UNIVERSITY OF PHOENIX ON PROBATION

Contact: Dom Slowey, 781-710-0014, [email protected]
Veterans’ Student Loan Relief Fund

Statement by Matthew Boulay, Executive Director, Veterans Student Loan Relief Fund and an Iraq War veteran:

Washington, DC – October 9, 2015 – The Department of Defense yesterday announced sanctions against the University of Phoenix, suspending it for from participating in its tuition assistance programs and barring school officials from recruiting at military facilities, including job fairs. The 14-day suspension allows the company to respond, after which the suspension can be extended or ended (with or without conditions).

The move came after news reports uncovered improper recruiting and marketing practices by the school. The report, by Reveal, exposed how the company paid the military for exclusive access to military bases, holding recruitment events disguised as “resume workshops” and improperly using military insignias on giveaways without required authorization.

Matthew Boulay, Executive Director, Veterans Student Loan Relief Fund and an Iraq War veteran said: “The Defense Department has taken a bold, but necessary, step to protect veterans from outrageous predatory practices used by the University of Phoenix. DOD needs to keep the pressure on U Phoenix and clamp down on other for-profit educational predators. Our veterans need better protections against these profiteers who are defrauding veterans, using misleading and aggressive marketing and recruiting tactics, while providing an inadequate education.

“These young men and women have dearly earned the opportunity to attend college or career training programs and be able to use the degrees and certificate they receive to find gainful employment and start successful careers. The Post-9/11 GI Bill and the Montgomery GI Bill before it are our country’s most important tools for helping Iraq and Afghanistan war veterans achieve the American dream. The Defense Department should not be engaged in an ‘access-for-pay’ scheme to give these companies unfettered admittance to military bases to sell their inadequate educational programs.

“Many for-profit colleges use hard-sell tactics that catch returning veterans and active-duty military unaware of the high cost and low success rates of these institutions. Largely financed by taxpayer-funded scholarship and loan programs, for-profit institutions charge exorbitant tuitions and are rife with hidden fees, yet their dropout rates and dismal student outcomes are dramatically high. They sell empty promises of a high quality education and “guaranteed” jobs to lure veterans into enrolling, signing long-term contracts that ultimately exhaust their GI Bill benefits and leave them empty handed – without a degree, without transferable credits and heavily in debt.”

About the Veterans’ Student Loan Relief Fund

The Veterans’ Student Loan Relief Fund was created by Jerome Kohlberg, a World War II veteran and early champion of the Post-9/11 GI Bill. Applications for grants of up to $5,000 are currently being accepted for qualified active-duty military, veterans and family members, who believe for-profit education companies have deceived them. To date 31 veterans have been awarded grants. For complete guidelines and an application, please visit http://iava.org/loan-relief.

Report Abuse

The Departments of Veterans Affairs, Defense, Education and Justice, along with the Consumer Financial Protection Bureau and the Federal Trade Commission, created a centralized, online system to help student veterans fight back against the deceptive and fraudulent practices of some colleges and technical training schools. Veterans who believe they have been deceived by a for-profit college are encouraged to report it:

  • DOD Tuition or MyCAA Education Benefits
  • Montgomery or Post 9/11 GI Bill – Department of Veterans Affairs
  • Federal Financial Aid (i.e., Pell grants and Federal Loans) – Department of Education – [email protected]
  • Private Student Loans – Consumer Financial Protection Bureau

 


New York Times: When Colleges Use Veterans as Pawns

In a must-read editorial, the New York Times calls for much-needed reform of how for-profit colleges are able to exploit veterans’ Post-9/11 GI Bill benefits:

For-profit colleges that burden students with crippling debt — often while giving them useless credentials in return — are luring veterans who receive G.I. Bill benefits to take advantage of a loophole in federal law. On the merits, a proposal in President Obama’s 2016 budget that would close this destructive loophole deserves unanimous support in Congress. But because the for-profit industry has considerable power in Washington, veterans may be let down.

 

At issue is what is known as the 90-10 rule. It prohibits for-profit colleges from receiving more than 90 percent of their revenue from Department of Education student aid, including grants and loans. Congress passed this law in 1998 to make sure that for-profit colleges were not financed solely through the federal Title IV student aid program and were capable of attracting students who either paid themselves or used aid from other sources.

 

But by failing to explicitly count G.I. Bill benefits and Department of Defense Tuition Assistance in the 90 percent, Congress created an opening for the schools to count this aid as part of the private 10 percent. By pursuing and signing up veterans, schools can now cover up the fact that few, if any, private citizens are willing to pay to attend them.

The editorial outlines how both the US Senate and multiple state attorneys-general have been investigating for-profit colleges:

Last year, Corinthian Colleges — one of the top recipients of G.I. Bill money — admitted to falsifying job placement data or grade and attendance records at various locations and reached an agreement with the government to shut down or sell about 100 campuses. The Consumer Financial Protection Bureau later sued Corinthian, charging that it had lured tens of thousands of students to take out costly private loans to cover its overpriced tuition “by advertising bogus job prospects and career services…”

 

But lawsuits and damaging revelations have not deterred the industry from defending the unseemly status quo.

 

In November, it went to court to challenge perfectly reasonable federal rules requiring career training programs to show that their graduates earn enough to pay back their loans if the schools are to remain eligible for federal aid.

 

This industry clearly needs to be cleaned up. Congress can take the simple step of revising the 90-10 rule so that G.I. Bill and Defense Department tuition are counted as what they clearly are: taxpayer dollars.

We agree. To stay informed about the latest developments in the movement to reform for-profit schools and protect student veterans, follow us on Twitter and like us on Facebook.



President’s 2016 Budget Would Remove Target from the Backs of Veterans

(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.”

# # #

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


Should For-Profit Colleges Be Allowed To Spend Taxpayers’ Money To Put Their Names On NFL Stadiums?

Consumerist takes a look at the controversy surrounding the University of Phoenix stadium:

This past Sunday — and for the second time in seven years — the Super Bowl was played at a stadium carrying the University of Phoenix name. The for-profit online school paid more than $150 million to slap its brand on the stadium, with much of that money coming from taxpayers. Some groups say that for-profit schools should not be allowed to make such splashy marketing investments at a time when there are so many questions about the quality of education provided by for-profit institutions.

 

Over the past several years, legislators and consumer advocates have called for rules that would limit the amount of federal dollars for-profit colleges can spend on marketing each year….

Shortly before the 2015 Super Bowl, a number of veterans’ rights groups gathered thousands of signatures on a petition calling for the for-profit school to relinquish the stadium’s naming rights….

 

Matthew Boulay, executive director of the Veterans’ Student Loan Relief Fund, tells Consumerist that the petition is just one piece of a larger issue.

 

“This is part of an effort to get the for-profit colleges to think more about students’ education and less about their bottom line,” he explains. “I love the Super Bowl, the NFL and football, but we should be outraged that the University of Phoenix is exploiting this big game for marketing purposes.”

Click here to sign the petition.


Come Super Bowl Sunday, Will the University of Phoenix Regret Its Naming Rights Deal?

A great article by Robert Klara in Adweek gets right to the heart of the matter: “The University of Phoenix has an accountability problem that predates the Super Bowl and will almost certainly outlast it: the issue of corporate responsibility, or investing school funds in teachers and classes, not advertising and naming rights.”

Klara writes:

The school does not have a traditional campus, nor does it have any sports teams. It does, however, have a great deal more money for marketing than many colleges, because the University of Phoenix is a for-profit institution.

That fact may explain why, in 2006, the school was in a position to part with $155 million to put its name over the stadium door.

Of course, back then, that deal didn’t raise as many eyebrows as it’s likely to now. Thanks to a period of intense scrutiny that started with a Senate investigation of for-profit colleges that began in 2010, the for-profit educational sector has come under considerable fire in the last four years, both on Capitol Hill and in the media. An array of critics has alleged that schools like the University of Phoenix turn out comparatively few graduates while saddling enrollees with crushing student-loan debt. And that raises a prickly question: Will this high-profile naming-rights deal, one that will bring the University of Phoenix Stadium into millions of American living rooms, backfire as a piece of marketing?

“I’m sure they’re having anxious moments right now,” speculates Abu Noaman, CEO of academic marketing consultancy Elliance. “They’ve already gotten reprimanded by the Department of Education, saying you’re taking a disproportionately large share of federal aid, not graduating enough students, and [the graduates] aren’t finding the jobs you’re promising them. The question is: Why is [the University of Phoenix] squandering money on a sponsorship instead of serving students and graduating more of them?”

It’s a good question. Add your voice to the petition.

Football fans saw the school’s name on TV during the 2008 Super Bowl, but that was before the federal government started turning up the heat. In 2010, the U.S. Senate Committee on Health, Education, Labor & Pensions, chaired by Sen. Tom Harkin (D-Iowa), began an extensive investigation of the for-profit higher-education industry. Its findings, released in 2012, were particularly damning for the University of Phoenix. Harkin’s investigators found that the school derived 88.7 percent of its 2010 revenues from federal student-loan programs, even as it spent nearly three times as much on marketing compared with instruction, while its dropout rate was over 66 percent.

In October of last year, the Department of Education responded by cracking down on the for-profit education sector. “Career colleges must be a stepping stone to the middle class,” U.S. Secretary of Education Arne Duncan announced. “But too many hardworking students find themselves buried in debt with little to show for it.” The new DOE regulations stipulated that a student’s loan debt could not exceed 8 percent of his or her total earnings. Seven days later, the Association of Private Sector Colleges and Universities, a trade group representing over 1,400 for-profit colleges, sued to stop the regulation from taking effect.

This, then, is the fight that’s been playing out in public, and it comes amid a flurry of media stories on the debatable merits of an online education. (One CNN headline read: “For-profit college risk: huge debt, questionable degree.”) Noaman wondered whether the university would have gone ahead with the deal in 2006 had it known the bad publicity storm that was coming. And now that it’s here, this might not be a good time to see a nine-figure naming-rights deal splayed across a state-of-the-art sports complex.

Another good question come from Rex Whisman:

“When I saw that the University of Phoenix had been granted naming rights to the stadium, it was a bit confusing for me at the time, because we’re used to seeing corporate logos there…[and] why would a college that has no athletic department be paying $155 million to put their name on a stadium?”

These days especially, Whisman continued, “most people have a real or perceived concern about the deep pockets of for-profit institutions, thinking they’re only in it for the revenue.” The University of Phoenix is “almost boasting about its profits, saying they’ve got 155 million extra dollars lying around to invest in a stadium.” (Apollo Education Group reported a net income of nearly $205 million for fiscal year 2014.)

So what’s likely to happen when nearly half of American households tune in to the Big Game and see the University of Phoenix naming rights deal in high resolution? “There’s going to be some kind of backlash,” Elliance’s Noaman ventured, “but not necessarily from their customers. I think it’ll happen from society at large. It’ll be policymakers who come down hard on them.”

You can come down hard on the University of Phoenix, too. Sign the petition and share this tweet: