Report: For-Profit Colleges Receive Lion’s Share of GI Bill Money


September 23, 2011

Eight for-profit colleges and universities received $1 billion — or 24 percent of all G.I. Bill money in the last year — according to new numbers released yesterday [PDF] by the Senate Health, Education, Labor and Pensions Committee [HELP].

If you watched our recent film Educating Sergeant Pantkze, you’re probably not particularly surprised. In recent years, for-profits have increased efforts to attract veterans after the passage of a robust new post-9/11 GI Bill in 2008.

Apollo Group, Inc. (the parent company to the University of Phoenix) received $218 million from G.I. Bill benefits in 2010-11; up from $77 million the previous year. By comparison, the University of Maryland, which is the top state school recipient of G.I. Bill funds, received $51 million, up from $20 million the previous year. (NPR has a nice graphic that breaks down the funding.)

But perhaps the most startling figures in the report are the low graduation rates. “Of the eight for-profits receiving the most G.I. Bill money, five saw more than half of their students fail to graduate,” reports Stars and Stripes. At Kaplan University alone, 68 percent of G.I. Bill-funded students failed to obtain their bachelor’s degree, as compared to 26 percent at the University of Texas, the state school with the highest dropout rate.

“The Post-9/11 G.I. Bill education benefit is intended to be a gateway to opportunity for those who have bravely served our country,” said Sen. Tom Harkin (D-Iowa), who chairs the HELP committee.  “But I am concerned that many of those who use their one-time benefit at a for-profit college are being denied the chance to get a good education and begin a fulfilling career.”

“When one looks at the evidence, [it is clear] the Post-9/11 G.I. Bill has been usurped by predatory for-profit schools,” Ted Daywalt, a retired Navy officer and president of VetJobs, told the committee.

At the heart of the issue is what’s known as the “90-10” rule, which says that 10 percent of for-profit college and universities’ revenues must come from sources outside of federal student aid. But G.I. Bill benefits can be counted towards the 10 percent, making them a lucrative source of revenue for the for-profits.

“This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform,” Hollister K. Petraeus, assistant director for service member affairs at the Consumer Financial Protection Bureau and wife of retired Army general and current CIA director David Petraeus, wrote in a New York Times op-ed yesterday.

Sen. Tom Carper (D-Del.) told Stars and Stripes that senators are trying to work out a “bipartisan fix to that problem.”

In a statement, interim president of the Association of Private Sector Colleges and Universities Brian Moran said that “private sector colleges and universities do not receive a disproportionate share of Post-9/11 G.I. bill dollars.” He claims that his schools offer vets a vital service:

While a traditional postsecondary experience is appropriate for many veteran students, others want the kind of flexible and accelerated schedules, career focused programs, and immersive instructional methods that characterize a quality education.

Bonus: Listen to audio of recruiting calls to vets made by one for-profit college.

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