President Obama has signed an executive order that the administration says will crack down on colleges that prey on military veterans with misleading information about financial aid, credits and programs.
The move comes amid reports of for-profit schools aggressively targeting veterans and the tuition assistance money provided in the G.I. Bill. Administration officials said they’ve seen a pattern of some schools enrolling large numbers of military students. Some of the schools lure the students in with false promises of generous financial aid or take advantage of veterans suffering from brain injuries sustained at war.
The executive order will require the Defense Department to come up with new rules limiting the access school recruiters have to military bases. It will require more transparent disclosure of financial aid options and easier access to information about school programs. The order also registers the term "GI Bill," which allows the military to crack down on websites masquerading as official government sites.
A group representing for-profit schools called Obama’s move "deeply unfortunate." Members of Congress already were working to correct these issues, noted Steve Gunderson, a former Wisconsin congressman and president of the Assn. of Private Sector Colleges and Universities.
While the executive order applies to all colleges and universities, the abuses have been concentrated among for-profit schools, which get a disproportionate share of military-related educational benefits. Of the $4.4-billion in post-9/11 G.I. Bill dollars paid to colleges and universities from 2009 to 2011, more than a third, about $1.65 billion, went to for-profit colleges, according to a Senate committee report released last fall.
Bradley Safalow, an analyst who follows the for-profit sector, said that most of the large publicly traded for-profit college chains — University of Phoenix, Kaplan, Corinthian, ITT, Bridgepoint and the like — would most likely face compliance problems if G.I. Bill and military tuition assistance were considered federal student aid under the 90/10 rule.
But only Congress can change the rule. In a press briefing, senior administration officials said the president was “open to legislation” revising the 90/10 rule. Senator Richard Durbin, an Illinois Democrat, has introduced legislation to change the 90/10 rule, lowering the threshold to 85 percent, and requiring colleges to count G.I. Bill benefits and military tuition assistance as federal student aid for the purposes of the rule. In addition, Senator Tom Carper, Democrat from Delaware, introduced a bill that would include military benefits as federal student aid, while keeping the balance at 90/10, and a companion bill is pending the House. No Republicans are co-sponsoring either bill.
According to a recent study by Senator Tom Harkin, an Iowa Democrat, eight for-profit colleges last year got $636 million in G.I. Bill benefits, a quarter of all such benefits — and dropout rates at most of them were above 50 percent. The study found that for-profit colleges also take in the majority of the tuition assistance available to military spouses. It costs taxpayers more than twice as much to send a veteran to a for-profit school as to a public university, the study found.
Mr. Harkin’s investigation also found that in fiscal 2009, 15 of the largest for-profit education companies spent $3.7 billion — 23 percent of their budgets — on advertising, marketing and recruitment, compared to an average of less than 1 percent of revenues at nonprofit colleges and universities. Those same 15 companies received 86 percent of their revenues from federal student aid programs.
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