Report: For-profit colleges cashing in on military

For-profit college companies are taking in enormous amounts of federal student aid money by recruiting and enrolling members of the military, veterans and their families, with questionable returns, according to a new report from a vocal Senate critic of the industry.

Citing low student loan repayments and high dropout rates at for-profit schools, the report from Sen. Tom Harkin is urging Congress and the federal agencies involved to "act now" to make sure the aid programs are not being exploited.

A representative of for-profit colleges responded that the enrollment growth ought to be celebrated, and that active-duty military and veterans are choosing schools that serve their needs.

The report released Thursday by Harkin — chairman of the Senate Education, Labor and Pensions Committee — stops short of saying the schools are failing veterans and the taxpayers who support them.

But it does provide a new snapshot of just how successful for-profit colleges have been in enrolling military personnel and veterans after the government greatly expanded their college benefits through the Post-9/11 GI Bill of 2008 and more generous Department of Defense education programs.

Between 2006 and 2010, combined Defense Department and Veterans Affairs education benefits received by 20 for-profit education companies increased from $66.6 million to a projected $521.2 million, the report says.

Among the more detailed findings:

— Between 2009 and 2010 alone, revenue from military educational benefits at 20 for-profit education companies increased 211 percent.

— In the first year of the Post-9/11 GI Bill the VA spent comparable amounts — $697 million and $640 million, respectively — on tuition for students attending public schools and students attending for-profit schools. But that subsidized the educations of 203,790 students at public schools, compared to 76,746 at for-profits.

— Because of for-profit schools' high tuition, students receiving Post-911 GI Bill benefits at the schools received 36.5 percent of the money distributed, even though they account for just 23 percent of the bill's beneficiaries.

— Four of the five for-profit schools taking in the most Post-9/11 GI Bill money have loan repayment rates of 31 to 37 percent.

"This report raises serious questions about whether some for-profit education companies view providing education to our service members and veterans as incidental to ensuring a robust profit for their company and their shareholders," Harkin, an Iowa Democrat, said in a statement.

Harris Miller, president and CEO of the Association of Private Sector Colleges and Universities, an industry lobbying group, said the growth of military and veterans is military and veteran students choose for-profits because they offer flexibility and career training needs.

"I just don't understand how we can trust young women and men to literally lay down their lives to protect our country, and yet we say they should not have a voice in terms of what kind of educational system suits their particular needs," Miller said.

On a conference call organized Thursday by Harkin's office, the head of a veterans group reported a "growing number of horror stories" about veterans' experiences with for-profit colleges. Donald Overton, executive director of Veterans of Modern Warfare, cited aggressive recruiting, minimal accountability and a lack of concern about veterans' needs.

Army veteran Marvin Arandia said in an interview arranged by Harkin's office that he all but drained his GI Bill benefits studying for an associate's degree at a Texas branch of for-profit Westwood College.

He decided to leave the school and attend a community college, but had to start his education from scratch after learning Texas would not accept transfer credits from Westwood because the school lacked regional accreditation.

"I did my research to a certain extent, but you can't do everything," said Arandia, 31, who still hopes to make it to a four-year public university. "It was a lot of wasted money, a lot of wasted time."

Other military graduates of for-profit colleges describe different experiences. Will Sampson, while an active-duty Marine, said he drove 80 miles roundtrip five nights a week to attend night classes at ECPI College of Technology, where he earned a degree that helped him land an information technologies job at a North Carolina bank.

"I truly believe without that education that was given to me, I don't think I would have ended up where I'm at now," Sampson said Thursday in an Association of Private Sector Colleges and Universities conference call.

The report from Harkin's office alleges that dollars from military benefits allow for-profit schools to "evade" a federal rule that no more than 90 percent of their revenues come from federal Title IV money, such as Pell Grants. However, the military aid programs are exempt from that rule, something that Democratic lawmakers have pledged to seek to overturn.

Harkin has staged a series of hearings critical of the sector this year. But his pledge to pursue a legislative fix is in doubt because of the Republican takeover of the House, among other factors.

The report, drawn from both government data and information Harkin requested from 30 for-profit college companies, says some institutions "undoubtedly provide a quality education" to military benefit recipients.

The for-profit college sector has faced mounting scrutiny this year and is fighting proposed Education Department regulations that would cut off federal aid to some programs. Studies show for-profit college students are most likely to default on their loans and are saddled with large debt. For-profit college officials say they take in large numbers of non-traditional college students who are not being served elsewhere.