Servicemembers At Failing For-Profit Schools Not Protected By Veterans Affairs

When a for-profit college closes its doors, students are often left with hefty student loan tabs and little recourse. Some of those borrowers may be eligible for a discharge of their debts through the Dept. of Education, but others – like the thousands of veterans who used their GI Bill benefits to finance their education – are simply out of luck, often losing their chance to obtain a degree, thanks in part to failures within the Department of Veterans Affairs.

For-profit chains, like the now-defunct Corinthian Colleges, have long courted servicemembers and their families to get their hands on billions of dollars in GI Bill benefits. Unlike federal student loans, tuition paid for by the GI Bill doesn’t count toward a school’s federal financing allotment, meaning a for-profit college could actually be getting more than the supposed limit of 90% of its revenue from taxpayer funds.

But perhaps the most troubling aspect of a new report from the L.A. Times is the alleged failure of VA administrators to warn students of potentially deceptive and fledgling for-profit schools, despite numerous warning signs.

Although the VA has released an online tool listing overall graduation rates and loan default rates for some for-profit colleges in an attempt to ensure students know what they’re getting into, lawmakers and advocates say it’s too little, too late for some students, specifically those who attended Corinthian College’s WyoTech, Heald College and Everest University campuses.

For those former students, advocates say the VA failed to properly police problematic institutions, leaving servicemembers in a no-win situation.

Part of the problem is a disconnect between the VA – which administers the GI Bill – and state-run veterans’ agencies – which decide when to revoke a school’s ability to collect GI Bill funding.

In the case of Corinthian Colleges, which closed its doors in April 2015, the company experienced a prolonged downward spiral beginning in the summer of 2014 – plenty of time for the VA to step in, the advocates say.

Despite several federal and state investigations into the for-profit chain’s business practices — and actions by Massachusetts and California to cut off funding and benefits — more than 400 active duty and retired servicemembers remained enrolled at the company’s campuses in Arizona, Hawaii, Oregon and New York when they abruptly closed this spring.

Robert Worley, who directs the VA education service, tells the L.A. Times that while the number of students enrolled at the school when it closed could be seen as a negative, the actual effect on those servicemembers was minimal.

But that’s not exactly how some former students see things, in part because losing their GI Benefits often entails losing a lot more than just their shot at an education – it also means the loss of their homes.

Charles, a former U.S. Army Military Police officer who attended Heald College in Honolulu, says that while he heard about issues at Corinthian, he didn’t’ think much of it because the VA never raised issue.

When the campus shut down, his GI Bill allowance – including that for housing – was suspended. As a result he fell behind on rent.

“I didn’t do anything wrong,” Charles, who was just three classes away from graduating with a criminal justice degree, tells the L.A. Times. “I served my country. I enrolled in school and took advantage of my benefits. Why should I be punished?”

It was a similar situation for Paul, a Marine Corps veteran who attended WyoTech in California.

When the school closed its doors and his benefits were suspended, he also lost his housing allowance. As a result, he lived for three months in his SUV. He’s now using what little he has left in GI Benefits to finish his degree at National Polytechnic College in the City of Commerce.

“They were excited to have us because they knew it was a guaranteed paycheck,” he says. “I wasted a lot of years of my life going to that school.”

Worley, with the VA, says that students who had concerns about Corinthian could have simply withdrawn from the schools prior to their closures – and the disappearance of their benefits.

While there’s little that can be done for veterans like Charles and Paul and others who attended Corinthian campuses, legislators have been pushing for stricter restrictions on for-profit college’s counting of GI benefits in an attempt to better protect servicemembers from the being unfairly targeted for recruitment by closing loopholes in the way these schools count federal funding.

For-profit chains currently must abide by the 90/10 rule – used to cap for-profit colleges’ federal funding – is a provision in the law that bars for-profit colleges and universities from deriving more than 90% of their revenue from the U.S. Department of Education’s federal student aid programs. The other 10% needs to come from sources other than the federal government.

Currently, tuition assistance such as the GI Bill for servicemembers and MyCAA for their spouses are not included in the 90/10 calculation. That essentially allows for-profit colleges to count federal funds for 100% of their funding, legislators say.

In the past five years, 40% of Post-9/11 G.I. Bill tuition benefits have gone to the for-profit sector, even as questions continue to be raised about these institutions’ graduation, default, and job placement rates, Senators Tom Carper of Delaware, Dick Durbin of Illinois, and Richard Blumenthal of Connecticut said when introducing Military and Veterans Education Protection Act of 2015 [PDF] in June.

“It’s time for Congress to get serious about addressing for-profit colleges in our higher education system. We’ve been bystanders for too long as our servicemembers and veterans are taken advantage of as a result of this loophole,” Sen. Durbin said of the third attempt to rein in for-profits’ use of GI Benefits.

Introduction of the new bill came two months after a group of senators asked the Department of Education to take an aggressive stand against for-profit college’s exploitation of servicemembers.

In the letter, the senators express concern over the lack of protection servicemembers and veterans have when it comes to being targeted and exploited by some for-profit colleges because of their access to 9/11 GI Bill funding.

In addition to trying to enact changes via legislation, regulators have trained their watchful eyes on schools such as the University of Phoenix’s practices regarding servicemember recruitment.

Last week, the California Attorney General’s office opened an investigation in the University of Phoenix’s military recruitment efforts going back as far as 2010, as well as its use of military logos and emblems for marketing purposes.

The attorney general’s probe into University of Phoenix’s recruitment practices comes a month after a report from Reveal detailed how the company skirts some rules in order to showcase the school’s prowess to military members, in hopes of enrolling servicemembers.

School representatives used custom-engraved coins as part of the University’s on-base recruitment efforts. The coins, which features the school’s logo on one side and the emblems of all military branches on the other, is similar to a “challenge coin” given to military personnel by officers to mark major accomplishments.

For-profit colleges recruit vets for cash [The Los Angeles Times]