WASHINGTON — The Department of Veterans Affairs abruptly dropped plans Wednesday to suspend an ethics law barring employees from receiving benefits from for-profit colleges. The move comes after criticism from government watchdogs who warned of financial entanglements with private companies vying for millions in GI Bill tuition.
In a statement to The Associated Press, the VA said it had received "constructive comments" on the Trump administration plan and as a result would delay action.
As recently as Tuesday, the department had told AP it would implement the waiver next Monday, citing the lack of any "significant adverse comment." It changed its position after it was asked about rising opposition to the plan.
"VA has submitted paperwork to the Federal Register today, to be published Friday so that the notice is withdrawn," spokesman Curt Cashour said Wednesday.
The VA published the proposal on Sept. 13, calling the 50-year-old law outdated and unfair to VA employees who it said often have no real conflicts of interest. It cited as an example a VA doctor who receives payment for teaching courses as an adjunct professor.
The federal ethics law, passed in 1966 in the wake of several scandals involving the for-profit education industry, calls for dismissal of any VA employee who receives "any wages, salary, dividends, profits, gratuities, or services" from a for-profit school in which a veteran is also enrolled using VA GI Bill benefits.
In interviews this week, veterans groups and ethics experts said the process was rushed, betrayed the will of Congress and gave for-profit colleges an opening to improperly reward VA employees who steer veterans to the schools. They also challenged what they said was limited publicity of the proposed change.
At least four major veterans' organizations — Student Veterans of America, The American Legion, Veterans of Foreign Wars and Vietnam Veterans of America — urged the VA to grant waivers case by case, something that agency officials had complained was burdensome, rather than issue a blanket waiver covering all 330,000 VA employees.
"It's highly questionable," said Richard Painter, who served as chief White House ethics lawyer for former President George W. Bush. "The VA has a great big pot of money and every educational institution wants a piece of the action. And there's no doubt for-profit colleges have a lot of influence in this administration."
Cashour said VA Secretary David Shulkin's proposal was prompted by concerns from VA employees following a July inspector general's report that found two employees had violated the conflicts of interest law by working as adjunct professors. The IG also recommended issuing waivers case by case.
For-profit colleges have found an ally in President Donald Trump, who earlier this year paid $25 million to settle charges his Trump University misled customers. Trump's education secretary, Betsy DeVos, halted two Obama-era regulations to shield students from fraud and predatory actions by for-profit universities. She has also delayed action on tens of thousands of claims for loan discharge from former students at for-profit colleges.
The ethics law had already come under criticism. Just two months ago, the Republican-controlled Senate Appropriations Committee urged the VA to re-examine the law, saying that it may not sufficiently address meals and gifts from for-profit colleges as another potential source of conflicts of interest. The committee told Shulkin to prepare a report on the law's effectiveness in stemming conflicts of interest within six months.
Carrie Wofford, president of Veterans Education Success, a group that focuses on fraud and abuse of student veterans, noted that for-profit colleges are especially attracted to veterans because of a law that caps the amount of federal funds that colleges can receive. The GI Bill is not considered "federal funds," which encourages the schools to aggressively recruit veterans.
"It's ugly," Wofford said, noting that more, not less, safeguards are likely needed to stem abuses.
Total government spending on the GI Bill is expected to be more than $100 billion over 10 years.
Associated Press writer Maria Danilova contributed to this report.