Post-9/11 GI Bill Was a Windfall for For-Profit Colleges: Senate Committee

NEW YORK (MainStreet) — In his June 18 testimony before the Senate Defense Appropriations Subcommittee, General Martin Dempsey, chairman of the Joint Chiefs of Staff, emphasized the importance of controlling indirect compensation in the Defense Department budget, which includes education benefits to military personnel under the GI bill.

Subcommittee chair Dick Durbin (D-Ill.) said that the Defense Department could save a ton of money if it "put an end to the subsidizing of for-profit colleges and universities" that charge twice the tuition of a public college--tuition paid by veterans through the GI Bill. At the end of the day, Defense Department funding to for-profit colleges was not threatened.

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Now the Senate Health, Education and Pensions (HELP) Committee has released a report concluding that the Big Eight for-profit colleges got 23% of the Post-9/11 GI Bill funds. For-profit college enrollment has fallen across the board—except among veterans, whose enrollment has increased dramatically.

Intended for veterans of the Afghanistan and Iraq wars, the Post-9/11 GI Bill, or the Veterans Education and Assistance Act, was intended to be an update to the existing GI Bill which evolved from its World War II precursor. Benefits first became available in August 2009.

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"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," said Iowa Democrat Tom Harkin, chair of the HELP committee. "It is evident that more needs to be done to ensure that veterans and service members, who have sacrificed so much for our nation, are receiving a quality education—and that taxpayer dollars aren't wasted on shoddy programs."

Of particular concern was the finding that it costs twice as much to send a veteran to a for-profit college as to a public counterpart. In the academic year 2012-2013 it cost on average about twice as much to send a vet to a for-profit college--$7,927—as to a public college--$3,914.

"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 stated.

Harkin said that $186 million in veterans benefits were wasted through the impending failure of Corinthian Colleges alone, which is trying to sell 85 of its campuses while shuttering 12 as a result of a loss of federal funding.

Along with Corinthian Colleges, the eight big for-profits include the Apollo Corp., parent of the University of Phoenix, Educational Management Corporation, parent of the Art Institute and Argosy University chains, ITT Educational Services, DeVry Inc., Career Education Corp., Strayer Education, parent of Strayer University, and United Technical Institute—UTI. All are publicly-traded companies.

Those companies have received $2.9 billion in taxpayer money to enroll veterans in these schools over the past four years.

Outcomes assessments are grim. The HELP report found that as many as 60% of those enrolled in for-profits on the Post-9/11 GI Bill dropped out within a year—and without a degree in 2012-13. Strayer University was the best performer; 34.1% dropped out of its BA program while 48.8% left its associates degree program. 61.9% dropped out of Education Management Corp's BA program, 63.7% left without their AA degrees.

"On too many basic measures of value, for-profit colleges fail to meet minimum standards," said Senator Durbin. "The recent collapse of Corinthian Colleges should serve as a warning to students to think twice before enrolling in these schools and to taxpayers who are subsidizing these schools, often up to 90% of their total revenue."

Senator Chris Murphy (D-Conn.), a member of the HELP Committee, stated, "The bottom line is that the federal government can't sit back and let some for-profit colleges get away with deceptive practices that rob our veterans of their education and military benefits in order to pad profits. We need to act now."

--Written by John Sandman for MainStreet

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