Budget Proposal Restricts GI Bill Funding to For-Profit Colleges


A proposal in President Obama's 2016 budget would limit the amount of Post 9/11 G.I. Bill funding that for-profit colleges could collect.

For a school to qualify for student aid, it is supposed to draw at least 10 percent of its revenues from non-federal sources. Currently, however, schools do not have to include funding from the Post 9/11 G.I. Bill and Defense Department tuition assistance programs in the 90/10 equation.

The White House proposal would change this stipulation and force colleges to include funding from the G.I. Bill and tuition assistance programs in the 90/10 equation.

In July, a Senate report stated that for-profit schools pulled in about $1.7 billion in G.I. Bill funds during 2012-2013, about $640 million more than in 2009-2010. An Iraq War veteran who worked for a for-profit college called this the "military gravy train" for these schools.

At the same time, Sen. Tom Harkin, D-Iowa, said the report found that seven of the top eight for-profit colleges receiving Post 9/11 G.I. Bill benefits were under state or federal investigation.

"More and more veterans are enrolling in high-cost for-profit programs of questionable quality, while the share of veterans enrolling in community colleges and state universities is shrinking," Harkin said in a statement last July. "While the Post-9/11 G.I. Bill was designed to expand educational opportunities for our veterans and service members, I am concerned that it is primarily expanding the coffers of the big corporations running these schools."

The report was a follow-up to one Harkin released in 2012 that found many for-profit schools offered little support for the veteran student and also questioned the quality of the programs and the value of the degrees or certificates offered.

But not everyone on the Hill will likely support Obama's proposal.

Rep. Jeff Miller, R-Florida, chairman of the House Veterans Affairs Committee, has said that the 90/10 rule is an arbitrary formula that unfairly implies problems with the quality of for-profit schools. 

According to a study cited by Miller, 42 percent of tuition revenue at private non-profit colleges, 70 percent at private for-profits and 82 percent at public colleges comes from federal student aid sources included in the 1965 law.

Among public colleges, 98 percent of community college tuition revenues come from federal sources, meaning that "most public colleges would fail the 90/10 rule if it applied to them," according to Miller.

He said he believes there already are systems in place at the federal, state and local levels to ensure schools -- whatever type -- are providing quality service and education to veterans.

The lawmaker said that Obama's proposal would do nothing to strengthen those systems but would be a disincentive for effective oversight at those levels.

Sen. Johnny Isakson, R-Georgia, chairman of the Senate Veterans Affairs Committee, said that Washington "shouldn't be limiting educational opportunities for our veterans and service members."

"This type of proposal should be debated by the appropriate committees in Congress and not patched together through an appropriations measure," Isakson told Military.com in an email on Tuesday.

Reps. Susan Davis and Mark Takano -- both California Democrats -- filed legislation in 2014 that would have required for-profit schools to meet the 90/10 rule. The legislation died in the House Education Committee, however, when Chairman Rep. John Kline, R-Minnesota, ruled it not germane to the topic of financial aid, The Fresno Bee reported.

The lawmakers filed their bill partly in response to a report by the Center for Investigative Reporting that found some 300 California schools that received G.I. Bill funding were prohibited from getting state financial aid at times in the prior four years, or operated without accreditation.

About $1.5 billion in G.I. Bill funding went to California schools and colleges between 2009 and 2014, the CIR report claimed, of which 40 percent -- $638 million -- went to institutions that had failed state financial aid standard at least once in the previous four years.

-- Bryant Jordan can be reached at bryant.jordan@military.com.

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