For-profit colleges have been increasingly targeting and enrolling veterans, and raking in federal GI Bill funding, according to a report released today by Senator Tom Harkin and the Democratic majority of the Senate's education committee.
Overall enrollment in for-profit colleges has been in steep decline since 2009. In that same time frame, the report says, veteran enrollment at the country's largest for-profit colleges has "dramatically increased," with almost a third of veterans using GI Bill funding now attending for-profit colleges, up from 23% in 2009. That means that a huge chunk of federal funding for veterans' education is now flowing to public companies: of the ten top recipients of GI Bill money in 2008, eight were for-profit colleges, taking in more than $1.7 billion in GI Bill benefits in the 2013 academic year.
Harkin and Senate Democrats are well-worn foes of the for-profit college industry. Harkin first released a scathing critique of the industry exactly two years ago, and has been a primary proponent of regulations to limit the schools' access to federal money.
At the University of Phoenix, the country's largest for-profit college, veteran enrollment has increased 190%, the report said. More than 40,000 veterans now attend the school. Another of the top recipients of GI benefits, the report said, was Corinthian Colleges, the troubled for-profit giant that announced it was going out of business earlier this month in the wake of federal investigations and financial troubles. Corinthian "almost tripled" the amount of federal GI benefit money the company received between 2009 and 2013.
For-profit colleges say they are better equipped to serve veterans, who are nontraditional students and are usually looking for quick, reliable ways to enter the workforce and transfer credits earned in the military and elsewhere as opposed to traditional college experiences.
For companies like Apollo, which owns the University of Phoenix, veterans are desirable students. Their federal money comes in grants, not loans, so they pose no risk of going into default. Under proposed federal regulations, programs at for-profit colleges where high numbers of students default on their loans would lose their access to federal money.
For-profit colleges are also bound by regulations that say they cannot receive more than 90% of their revenues from federal funding. GI Bill benefits used by veterans, although they come from the federal government, don't count as part of that measurement; they are included the 10% of non-federal dollars. Most colleges toe the line of the "90/10 rule," drawing well above 80% of their revenues from federal money. It's the GI Bill benefits, the Senate report says, that allow those schools to remain in compliance with the law.
The GI Bill exemption, according to the report, "actually incentivizes these companies to aggressively market to and recruit veterans." Several different attempts have been made to amend the regulations to include GI Bill funding in the "90 percent metric," but they have been quickly shut down in committee.
Regulators in California have recently barred the University of Phoenix from enrolling veterans in several of its programs, according to the Center for Investigative Reporting. The company had run afoul of another funding regulation that prevents individual programs from getting more than 85% of their revenue from GI benefits.
Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in New York. She covers the intersection of business and education.
Contact Molly Hensley-Clancy at email@example.com.
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