New Bill Aims to Close G.I. Bill Loophole at For-Profits


February 8, 2012

Sen. Dick Durbin [D-Ill.] recently proposed a bill that would dramatically change the way federal money can be allocated to for-profit colleges. Currently, for-profits are bound by 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.

The proposed bill, called the POST Act and co-sponsored by Sen. Tom Harkin [D-Iowa], would redefine G.I. Bill benefits as federal funds. In addition, the 90-10 percentage would be shifted to 85-15, and penalties for noncompliance would take effect after just one year, instead of the current two.

This new bill follows on the heels of a September Senate Health, Education, Labor and Pensions Committee [HELP] report which found that eight for-profit colleges and universities received $1 billion — nearly a quarter of all G.I. Bill money — in the past year. Out of the top 10 recipients of G.I. Bill funds during the 2010-2011 school year, eight were for-profit institutions [PDF].

Brian Moran, the interim president of the Association of Private Sector Colleges and Universities, described the proposed bill as “another burden that will make it harder for students to get the education they deserve.  This legislation will only cut off access for thousands of veterans to the skill-intensive, hands-on programming and intensive job placement support that they need.”

FRONTLINE’s 2011 film Educating Sergeant Pantzke uncovered some for-profits’ aggressive and misleading recruiting tactics that critics say rob members of the military from obtaining a quality education. “Look, these veterans get this benefit one time; it’s a one-time shot,” Sen. Harkin told us in an interview. “And if they don’t get a quality education that can really help them with their lives, they’ll never get it again. But the hedge funds and the private equity firms that own these for-profit schools, they get the profits.”

One veteran featured in our film, Sgt. Chris Pantzke, participated in the forum where Sen. Durbin introduced the POST Act. Following his service in Iraq, Pantzke was a student the Art Institutes online, but he says he struggled due to his traumatic brain injury and post-traumatic stress disorder. He eventually flunked out, but was readmitted after the broadcast of our film. Pantzke formally withdrew last October, and had a message for others in his position:

If they’re going to go to a for-profit, call employers, see if they’ll accept an online degree. Compare with state institutions and community colleges, and classes on [your military] post. Do your research first before jumping in both feet like I did.”

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