White House urges Congress to protect US troops from aggressive for-profit colleges

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Marine Corps veteran Paul Fajardo, seen here in a June, 2015 file photo, lived in a car for three months last year after California suspended GI Bill benefits to Corinthian College's WyoTech campus in Long Beach -- and with it, the housing allowance. (Morgan Noelle Smith, os Angeles Times/TNS)
Marine Corps veteran Paul Fajardo, seen here in a June, 2015 file photo, lived in a car for three months last year after California suspended GI Bill benefits to Corinthian College's WyoTech campus in Long Beach -- and with it, the housing allowance. (Morgan Noelle Smith, os Angeles Times/TNS)

White House urges Congress to protect US troops from aggressive for-profit colleges

by: Danielle Douglas-Gabriel and Greg Jaffe | .
The Washington Post | .
published: November 12, 2015

WASHINGTON - The White House is urging Congress on Veterans Day to pass a series of bills that would protect U.S. troops from colleges taking advantage of their military benefits without delivering a quality education.

Men and women who serve in the military receive $57 billion in federal education funding that has become a stable source of revenue for many schools. Because the money is exempt from a key federal rule that governs the way for-profit colleges are funded, critics say those schools aggressively recruit members of the military and too often fail to prepare them for the workforce.

White House officials are pressing lawmakers to take up legislation introduced by Sen. Dick Durbin, D-Ill., to reinstate a rule that banned for-profit colleges from getting more than 85 percent of their operating revenue from any federal student loans and grants.

"This ramps up the accountability for schools that are marketing to veterans and other students who come with federal dollars, and to make sure that we are providing a high quality education for the veterans who have served us so well," said Cecilia Muñoz, the White House's domestic policy director, on a call with reporters Tuesday.

Congress first capped the amount of taxpayer dollars for-profit colleges could receive at 85 percent in 1992, to crack down on fly-by-night schools making money from student aid programs. The government figured a for-profit school with quality programs should have no trouble deriving at least 15 percent of its revenue from students willing to put up their own money. The for-profit industry fought against the rule, which was relaxed six years later as the cap was raised to 90 percent, and military education benefits were exempted.

"This high threshold allows far too much federal money to funnel to an industry that often provides a greater return on taxpayer investment to its administrators and investors than it does to its students," Durbin said. "We can't let this invitation to exploit our veterans continue."

Several veterans groups have championed the changes to the rules governing student aid revenue percentages in recent years, including Iraq and Afghanistan Veterans of America, the largest group representing post-9/11 veterans.

Forcing colleges to collect at least 15 percent of their revenue from non-federal sources would be "huge," said Phil Carter, who oversees veterans issues at the Center for a New American Security, a foreign policy think tank. "It will do a lot to reduce the financial incentives for for-profit schools to target veterans," Carter said.

Supporters of for-profit colleges argue that lowering the funding threshold is a punitive move that could ultimately limit higher education options for veterans.

"We should not be punishing veterans for attending a school that serves a larger number of low-income students depending upon financial aid for college," said Steve Gunderson, president of the Association of Private Sector Colleges and Universities, an industry group. "Federal student aid is designed to allow students who do not have the means to pay for postsecondary education have access to its benefits. Institutions that serve lower income students are more likely to have more students borrowing."

In the past five years, about 40 percent of G.I. Bill tuition benefits have gone to for-profit schools. Corinthian Colleges, the for-profit giant that filed for bankruptcy in May amid allegations of predatory lending and lying to the government about its programs, received $186 million in military tuition funding.

The collapse of Corinthian has led the White House to back legislation reinstating G.I. Bill benefits for students who use the money to attend schools that close midterm, as Corinthian did. The administration also is supporting a bill that would prevent military education funds from being used at unaccredited schools.

Obama's legislative wish list arrives a month after the Defense Department suspended tuition payments to the University of Phoenix, a for-profit chain. The Pentagon took action amid allegations that the university sponsored recruiting events in violation of an executive order preventing for-profit colleges from gaining preferential access to the military, charges the school denies.