For-Profit Schools Capitalize on American Veterans

Posted on Sep 19, 2011

Flickr / usag.yongsan

Troops listen to a Veterans Affairs official explain details of the GI Bill.

The GI Bill played a significant role in the expansion of the middle class in post-World War II America. Now, as veterans returning from Iraq and Afghanistan pursue educations, much of the bill’s funds—and sometimes their futures—are disappearing into for-profit schools such as Capella, DeVry, ITT Tech, Kaplan and the University of Phoenix.

Over the last few years, veterans’ funds have been a boon to such institutions, which take in almost as much money as public schools while enrolling one-third the number of vets. Most pro-profit schools do not offer legitimate academic accreditation, however, and at most of the highest-raking for-profits more than half of the students drop out within the first year. Some institutions have even signed up veterans for loans without their knowledge. At some others, more than 60 percent of military students default on their loans.

“We didn’t foresee that the for-profit sector, eager to please Wall Street investors, would go after [new government] funding aggressively, often in ways that are not in the best interests of veterans and service members,” said Sen. Tom Harkin, the leader of an investigation into 30 major for-profits. One person who had enrolled at the University of Phoenix declared on RipoffReport.com that the school “treats military students like cash piñatas.” —ARK

Mother Jones:

How did this much-loved program become corporate welfare? Congress expanded GI Bill benefits for service members and their spouses just as investors were looking for fast-growing stocks—like educational for-profits—to replace the once-hot real estate market. Tuition assistance is now paid directly to institutions, not soldiers, making it easier for schools to convince vets to sign over their benefits. GI Bill dollars have also enabled for-profits to boost how much federal financial aid they receive. In order to collect federal Title IV aid—Pell grants, Stafford loans, and Plus loans—the schools must obey the “90/10 rule”: They can’t derive more than 90 percent of their total income from Title IV programs. GI Bill funds don’t count toward that total. So every dollar of military aid enables for-profit schools to collect nine dollars from the Department of Education.

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