Critics Slam 'Predatory' For-Profit Schools

The Post-9/11 GI Bill has been a bonanza for for-profit schools and universities, some of which have targeted veterans with misleading ads and statements and then failed to deliver on academic promises, according to testimony yesterday on Capitol Hill.

In a hearing before the Senate Health, Education, Labor and Pensions Committee, witnesses criticized a system that has enabled a number of for-profit schools to reap big bucks by taking GI Bill money with little concern for providing any real education or training to veterans.

Sen. Jim Webb, D-Va., said the for-profits took a disproportionate amount of GI Bill money based on their numbers of veteran students. "Data we have been given shows that eight of the top 10 recipients of Post-9/11 G.I. Bill benefits in 2010-2011 were for-profit education companies [that] collected $1 billion -- 37 percent of benefits [but] trained 25 percent of veterans," Webb said. Webb was the prime mover of the Post-9/11 GI Bill, drafting and submitting it in its earliest version with no co-sponsors shortly after he was elected in 2006.

Daywalt added that not all online schools are engaging in predatory recruiting and enrollment practices, and he singled out University of Phoenix and American Military University as two good examples.

Daywalt told the Senate panel that Kaplan, the testing service-turned-online school, and Education Management Services, are two schools that warrant scrutiny. EMS is named in a lawsuit brought by the Justice Department and several states claiming it received about $11 billion in state and federal financial aid for which it was not eligible between 2003 and 2011.

Daywalt said there are perhaps 40 for-profit schools that are taking advantage of the generous Post-9/11 GI Bill, recruiting students principally because they represent federal dollars. But adding to the attraction is the fact that the GI Bill legislation contains a loophole that allow schools to take the tuition but not have it count as federal money. (Under the law, schools may not take in any more than 90 percent of their revenues from federal sources.)

Russell Kitchner, vice president of regulatory and governmental relations for American Public University System, which operates American Military University, did not dispute that there are predatory for-profits taking advantage. But he said he was wary of establishing the 90/10 rule for the for-profits. He said the change would require, on average, an 11 percent tuition hike for students.

Kitchner said a better way to combat the problem would be establish a means of measuring the success of a school in terms of its graduation rates and employment records of alumni.

Gallucci said the 90/10 law remains on the books and should be applied to schools using GI Bill funds.

"When predatory schools take advantage of our veterans, they rob our brave men and women their hard-earned benefits," he said.