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 military service members, 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 in general, the report from Sen. Tom Harkin urges Congress and the federal agencies involved to "act now" to make sure the 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 from 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, an increase of 683 percent, the report says.

Among the more detailed findings:

— Between 2009 and 2010, 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 supported 203,790 students at public schools, compared to 76,746 at for-profits.

— Because of high tuition charged at for-profit schools, 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.

"Given what we've already uncovered about the quality of education at many for-profit schools, I have serious concerns about whether the veterans who enroll at these schools are getting the education they deserve," Harkin, an Iowa Democrat, said in a statement. "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."

Harris Miller, president and CEO of the Association of Private Sector Colleges and Universities, an industry lobbying group, questioned the report's tone.

"Many of these students are choosing our schools over other alternatives because our institutions meet their needs for flexibility and career focused outcomes," he said. "If these students are mature enough to make the choice to put themselves in harm's way to serve their country, they are mature enough to select the higher education alternative right for them."

The dollars from military benefits, the report alleges, 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. GI Bill and Defense Department aid, however, is exempt from that rule, something that Democratic lawmakers have pledged to seek to overturn and the for-profit college industry opposes.

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 says enrolling veterans and service members also allows for-profit schools to expand the number of non-military students they enroll. It lets some institutions "undoubtedly provide a quality education" to military benefit recipients.

The report is drawn from both government data and information Harkin requested from 30 for-profit college companies.

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. This fall, a government report found students at for-profit colleges and universities were most likely to default on their loans. A study this spring by the College Board found that 53 percent of for-profit-college students finish with more than $30,500 in debt, compared to 12 percent of students at four-year public schools.

For-profit college officials emphasize that they take in large numbers of minority, older, low-income and first-generation college students who are not being served by traditional colleges. A number of schools are projecting new enrollment declines as they tighten admissions practices, partly in response to regulations going into effect next year that prohibit the use of incentive pay for recruiters.