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Are for-profit universities taking advantage of veterans?

July 24, 2015 at 7:31 PM EDT
Since 2009, the G.I. Bill has paid up to $21,000 a year of college tuition for those who served in Iraq or Afghanistan. Much of that money, though, goes to for-profit schools, which award degrees some employers don’t recognize. Aaron Glantz of the Center for Investigative Reporting and “Reveal” reports.

JUDY WOODRUFF: The G.I. Bill represents America’s promise to its military veterans. Since 2009, it has paid the cost of college tuition for those who served in Iraq or Afghanistan, up to $21,000 a year in taxpayer dollars.

Today, 40 percent of that money is flowing to for-profit schools, according to the Department of Veterans Affairs. But when veterans finish their studies, some employers and graduate programs don’t recognize or value those degrees.

From the Center for Investigative Reporting and Reveal, Aaron Glantz reports:

AARON GLANTZ: Three years ago, President Obama said he would stop for-profit schools from taking advantage of service members and veterans.

PRESIDENT BARACK OBAMA: They are trying to swindle and hoodwink you. And, today, here at Fort Stewart, we’re putting an end to it.

AARON GLANTZ: The president was responding to reports that for-profit colleges enjoyed virtually unrestricted access to bases, where they enrolled new students and profited from taxpayer money.

PRESIDENT BARACK OBAMA: We’re going to up our oversight of improper recruitment practices. We’re going to strengthen the rules about who can come on post and talk to service members.

AARON GLANTZ: President Obama signed an executive order that placed restrictions on for-profit schools to weed out deceptive recruitment practices. Three years after the president’s executive order, no school receives more G.I. Bill money than the University of Phoenix, according to the Department of Veterans Affairs.

The University of Phoenix is a large for-profit college chain with about 200,000 students, a majority of whom take classes online. We wanted to know whether the University of Phoenix was complying with the spirit and the letter of the rules President Obama put in place, and whether the for-profit college had gained an advantage through its relationship with the military.

DAN DRESEN, U.S. Military Veteran: University of Phoenix was one of the first schools to contact me.

AARON GLANTZ: Iraq War veteran Dan Dresen wanted to be a social worker, so he could help other veterans. The University of Phoenix gave him college credit for his military service so he could graduate quickly. That’s what convinced him to enroll. He even got credits for marksmanship.

For learning how to shoot a firearm in the Army National Guard, you got course credits for social work?



AARON GLANTZ: When Dresen went to apply for a master’s in social work at a state university, that school wouldn’t recognize his bachelor’s degree.

DAN DRESEN: I was devastated. I can’t use my degree.

AARON GLANTZ: It was stories like Dresen’s that led to the president’s executive order. The military followed up with new rules that ban inducements, including entertainment, for the purpose of securing enrollments of service members.

But what constitutes recruiting? The university paid for the reality TV star Big Smo to entertain the troops.

Here at Fort Campbell, the University of Phoenix is spending thousands of dollars to sponsor this concert. It’s one of dozens of events the for-profit school is sponsoring on military bases across the country. The University of Phoenix’s representative was introduced on stage as a friend of the military.

He gave away electronic devices. Fifteen minutes after the concert began, the Army kicked me off the base. An Army press officer told me off camera that I was asked to leave because I was talking on camera about the military’s relationship with the University of Phoenix.

Robert Muth is a former officer in the Marine Corps. He runs a legal clinic for veterans at the University of San Diego.

ROBERT MUTH, University of San Diego: It looks like you have a corporate entity buying access to look like the preferred or the selected educational provider for the veterans or soon-to-be veterans at a base.

AARON GLANTZ: Under President Obama’s 2012 order, schools are allowed to recruit on base only as part of official regulated education activities.

Documents from five military bases obtained using the Freedom of Information Act show the University of Phoenix sponsored events that had little to with education, hundreds of events over the last five years. The question remains, was the University of Phoenix recruiting at these events?

At the five bases we looked at, it paid the military about a million dollars for this access. The investment is dwarfed by the $345 million in G.I. Bill money it received last year, and, according to the Department of Veterans Affairs, which oversees the program, more than $1.2 billion since 2009, when the new G.I. Bill went into effect.

The University of Phoenix also produced a coin that its representatives hand out on military bases. It includes the insignias of every branch of the service on one side and the University of Phoenix logo on the other.

ROBERT MUTH: There’s a long tradition within the military of commanders providing challenge coins to individual troops who’ve done something great. If I’m a 19-year-old lance corporal and I see that coin, I assume the Department of Defense has viewed and vetted that organization and approved them in some way to provide me with an education.

AARON GLANTZ: Many organizations produce military coins. We found the University of Phoenix was using military insignia without authorization. We asked the Pentagon and the University of Phoenix about the coin.

Dawn Bilodeau, is the chief of education programs for the Defense Department.

Does that concern you?

DAWN BILODEAU, Chief of Education Programs, Defense Department: Yes. That would be — depending on where that was received and if they’re currently handing them out and it was reported, I would be compelled to take action.

AARON GLANTZ: Retired Major General Spider Marks is a dean at the University of Phoenix.

GEN. JAMES “SPIDER” MARKS (RET.), Dean, University of Phoenix: If there’s an issue with the specific coins that we were passing out, we’re going to get to the bottom of that, and those have been taken off the shelves. They’re not available. They’re gone.

AARON GLANTZ: Even so, Marks says, the coin doesn’t imply the University of Phoenix has the military’s seal of approval.

GEN. JAMES “SPIDER” MARKS: There isn’t an endorsement, implicit or explicit, by the use of that coin that DOD thinks any differently about the University of Phoenix than it does Lockheed Martin or it does Prudential life insurance or other companies that have challenge coins.

AARON GLANTZ: Ryan Holleran served 11 months in Iraq. When he returned home, he wanted to get an education.

RYAN HOLLERAN, U.S. Military Veteran: I have a bunch of friends who’ve gone through the University of Phoenix. I have comrades, like buddies who I went to war with who their partners were going to the University of Phoenix.

AARON GLANTZ: He’s headed to a Naval air station outside Dallas to attend a Hiring Our Heroes job fair sponsored by the University of Phoenix. Holleran agreed to take a hidden camera onto the base, so we could see if the University of Phoenix was following the rules.

The sponsorship of this event is permitted, as long as the school doesn’t use the event to recruit students. Holleran attended a resume workshop taught by the school.

RYAN HOLLERAN: When you walk in, there’s like four or five fliers and the biggest logo on all those fliers is the University of Phoenix.

AARON GLANTZ: The presentation had the school’s branding on every slide. And participants were repeatedly encouraged to visit the University of Phoenix’s Web site. Model resumes used by the University of Phoenix’s trainer included a degree from the University of Phoenix.

Yet, the main online campus that 24,000 veterans attended last year has a graduation rate of 7.3 percent, according to the Department of Education.

RYAN HOLLERAN: It wasn’t like they were just mentioning, like, oh, here, go get a higher education. It’s like, hey, come. Come buy my product.

AARON GLANTZ: Last month, two former University of Phoenix recruiters filed a lawsuit in a Kentucky circuit court against the school, alleging they were improperly fired. The recruiters said Hiring Our Heroes was just a cover, that they were required to operate stealthfully. It was a tool for surreptitiously obtaining personal information and/or prohibited recruitment activity.

The University of Phoenix denies the allegations. Internal company documents show the University of Phoenix has been tracking recruitment numbers on military bases, including at job fairs and entertainment events, where recruiting is supposed to be banned by military regulations.

And, so, even as the University of Phoenix lost half its students amid scrutiny from Congress and the media, the number of Iraq and Afghanistan veterans using the G.I. Bill there tripled, according to the Securities and Exchange Commission and the Department of Veterans Affairs.

We contacted the Fort Worth Naval Air Station about the Hiring Our Heroes event. They directed us to the Pentagon.

Again, Dawn Bilodeau:

DAWN BILODEAU: If any one of our educational institutions was providing a workshop where they provided their own marketing materials, used their own references and had their slides with their name, that would be a reportable offense, a noncompliance action. And we would receive those and adjudicate them.

AARON GLANTZ: But, so far, you have received no such complaints about Hiring Our Heroes?


AARON GLANTZ: But if it turned out to be true, that would be very troubling to you?

DAWN BILODEAU: It would be listed and we would take action.

AARON GLANTZ: As for morale-boosting events such as big-name concerts, Bilodeau said the Pentagon is aware of past improper recruitment practices and is taking action.

DAWN BILODEAU: In the past, it was a concern, but I feel very confident, with the new agreement that we have in place, that we’re going to be able to enforce the requirements that are in there and take action, place schools on probation when needed, which impacts their bottom line if they’re not able to recruit new students.

AARON GLANTZ: The University of Phoenix’s Spider Marks says the school is following the president’s executive order and Department of Defense regulations.

GEN. JAMES “SPIDER” MARKS: In terms of compliance, we do compliance exceptionally well. If we’re going to sponsor morale, welfare and recreation events on military installations, it’s to benefit the service member and to bring entertainment to them, opportunities with businesses off post, that kind of stuff.

If we are looking to find students who want to go through the University of Phoenix experience as they transition or while they’re on active duty, that’s a separate and completely distinct action on our part.

AARON GLANTZ: Dan Dresen says he was betrayed by the University of Phoenix. He’s already spent most of his G.I. Bill, and, on top of that, he’s $9,000 in debt.

DAN DRESEN: I feel that I wasted my VA benefits going to the school.

AARON GLANTZ: He’s starting over at this community college in Sacramento.

DAN DRESEN: It’s a little late for me, because I already went there. I think the other veterans should get out while they still can.

AARON GLANTZ: Dresen hopes more veterans will step forward to complain. If that happens, he says, perhaps the government will stop the flow of G.I. Bill money to for-profit schools.

For the PBS NewsHour, I’m Aaron Glantz from Reveal in Sacramento.

JUDY WOODRUFF: After learning about Reveal’s report, Democratic Senator Dick Durbin of Illinois sent a letter to the Pentagon asking it to investigate recruitment practices by the University of Phoenix. The Defense Department says it takes the allegations seriously and is looking into the matter.