Too Much GI Bill Money Going To For-Profit Schools?

Correction Nov. 3, 2011

A previous Web version of this story incorrectly referred to GIJobs.com. The website is GIBill.com. Additionally, based on information from the Senate HELP Committee, we said that for-profit companies brought in around $1 billion in benefits in the past year. The committee has corrected this information to say that the $1 billion figure applies over two years.

The nation's for-profit colleges and universities have reaped a windfall from the Post-Sept. 11 GI Bill.

The top for-profit companies will bring in around $1 billion in benefits over two years. And some lawmakers say federal regulations encourage these schools to target current and former members of the military.

At a Senate hearing Thursday, lawmakers and witnesses praised the two-year Post-Sept.11 GI Bill, saying it had helped many vets and active-duty service personnel go to college.

But Ted Daywalt, president of the service organization VetJobs, says abuses are common.

"The current Post-9/11 GI Bill has truly been usurped by predatory for-profit schools," he says.

Daywalt says many schools see military people as particularly attractive because their GI Bill funds do not count as federal support. It's an important rule for-profit schools follow: For every $100 a school takes in, only $90 can come from federal money such as student loans or Pell grants.

Holly Petraeus now looks out for vets at the Consumer Financial Protection Bureau. She says that as a result of that exemption, for-profit schools tailor their offerings so they'll appeal to vets and active-duty personnel.

"Easy to sign up, military friendly, you can do it online — but the question is: What is the value of those courses or that degree once you've completed them?" she says.

In many cases, not much, according to Petraeus' editorial in Thursday's New York Times.

Sen. Tom Harkin (D-IA) said at a news conference that these schools have much higher dropout rates than public schools, even though they cost the government a lot more money.

"Public schools [cost] about $4,874 and the for-profit schools [cost] $10,875 — so they get this huge dropout rate, but they're charging twice as much as the public schools," he says.

Many feel that the Department of Veterans Affairs and the Department of Defense just don't police these schools closely enough. That was the conclusion of a Government Accountability Office report earlier this year. It said the government does not counsel personnel about websites like GIBill.com, a private site that steers military folks to the school of their choice — as long as it's on the site's list of for-profits.

Top recipients of the post-9/11 GI bill benefits

Notes

For-profit student outcomes are based on all students who enrolled between July 1, 2008, and June 30, 2009. Public university systems' outcomes are based on Department of Education retention data and includes only first-time full-time students.

Bob Norton of the Military Officers Association of America says the VA and Defense Department need to monitor students' educational progress.

"Look at degree completion, look at licensing certification, look at the outputs," he says.

That means: Just how many people are graduating, and what kinds of jobs are they getting with those degrees?

The for-profit education industry says there's a good reason why service members and veterans flock to their programs. Brian Moran of the Association of Private Sector Colleges and Universities says his members offer the online courses and flexible schedules that soldiers and vets want.

"It comes as no surprise to us. Just recently the GI bill was expanded to include online and non-degree programs, of which private sector colleges do and do well," he says.

And there are many members in Congress who support the for-profit schools based in their districts. That makes it unlikely that lawmakers will take dramatic steps.

The Department of Education already faces a court battle and legislative challenges to new rules released earlier this year, which are meant to ensure that all for-profit students find well-paying jobs.

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