For-profit colleges under fire

Even lobbyists for for-profit colleges must be stunned by their industry’s ability over the past two years to capture an enormous share of Post-9/11 GI Bill benefits earned by Iraq and Afghanistan war era veterans.

The gold rush is on and competition to sign veterans who have the most valuable education package since World War II will intensify and perhaps get seamier before Congress acts to protect veterans and taxpayers.

Statistics compiled by the staff of the Senate Health, Education, Labor and Pension Committee, are alarming veteran advocacy groups, particularly in light of abuses by some for-profit colleges uncovered by congressional audits and by enterprising news organizations.

During the 2010-11 academic year, VA disbursed $4.4 billion Post-9/11 GI Bill benefits to nearly 6,000 institutions. Almost one quarter of those dollars — $1.02 billion — was paid to just eight for-profit companies.

The top seven GI Bill payment recipients were all for-profit companies: Apollo (which runs University of Phoenix); ITT; Education Management Corporation (Art Institute and Argosy); DeVry; Career Education Corporation (Sanford Brown and CTU); Stayer, and Corinthian (which runs Everest, Heald and Wyoming Technical). These companies alone, through stepped up marketing and aggressive sales techniques, saw payments from Post-9/11 GI Bill enrollments jump in a single year from $376 million to $975 million.

The eighth for-profit company among the top 10 institutions getting GI Bill payments is Kaplan, owned by the Washington Post. Its Post-9/11 GI Bill payments climbed in 12 months from $17 million to $44 million.

More disturbing for taxpayers and veterans is what they get for their money, senators said. Withdrawal rates for attendees at for-profit schools range from 44 percent to 68 percent, three to four times the withdrawal rates for the two non-profit schools among the top 10 recipients of GI Bill dollars, the University of Maryland System and University of Texas System.

Data also show that when veterans attend for-profit schools, the average cost to taxpayers rises to $10,875, more than twice the average cost of $4,874 to attend public college. Last year, for-profit schools collected more than one third of all Post-9/11 GI Bill benefits but trained just one quarter of the Post-9/11 veterans using benefits.

The committee also looked at how four of the largest for-profit companies used the federal dollars received from students. They found 44 to 66 percent of the money went toward educating students. The rest got divided between profits to shareholders and marketing to prospect students.

Student veterans and advocacy groups have testified that GI Bill users are being lured into for-profit schools too often with misinformation and deceptive practices.

“The actions and behaviors of some of these predatory for-profit schools, like Kaplan and Education Management, need to be stopped,” Theodore (Ted) L. Daywalt, chief executive officer and president of VetJobs, an online job search firm for military veterans, told the Senate federal financial management subcommittee. Daywalt first became aware of the issue working with disappointed vets who thought they had used their GI Bill to earn credible college degrees only to learn later they were “worthless.”

He and other witnesses spoke of bad apples in the industry using the same tactics that the Government Accountability Office found when its auditors last year went undercover to test how 15 for-profit colleges advised prospective students. GAO reported that all 15 schools, none of which it identified, made deceptive or questionable statements to applicants. Four schools had encouraged students to use fraudulent practices.