AGs Seek Better Protections For Servicemembers Deceived By For-Profit Colleges

Federal regulators must do more to protect servicemembers from unscrupulous colleges seeking to get their hands on their education benefits. That’s the message eight states want to get across to the secretary of Veteran Affairs following reports that some for-profit colleges target military personnel using predatory practices. 

The attorneys general from California, Massachusetts, Connecticut, New Mexico, Illinois, Oregon, Washington, and Kentucky urged secretary of Veteran Affairs, Robert McDonald, to use his authority to restore education and vocational benefits to thousands of servicemembers who enrolled at for-profit colleges because of deceptive and misleading enrollment tactics, such as those used by now-defunct Corinthian Colleges.

While the Department of Education has agreed to discharge student loans for some former Corinthian College students, the attorneys general ask the Department of Veterans Affairs to do its part.

“Rather than being honored, the veterans who enrolled in Corinthian schools were cheated out of these benefits,” the letter states. “ED has acted to remedy the harms suffered by student borrowers who were defrauded by Corinthian and other unscrupulous institutions—we respectfully urge you to act in harmony with your sister agencies and offer similar relief to student veterans who were harmed by precisely the same misconduct.”

Veterans have long been prime targets for unscrupulous for-profit colleges and their recruitment officers, thanks in part to federal funding provisions.

Under the current federal rule – known as the 90/10 rule and used to cap for-profit colleges’ federal funding – for-profit colleges and universities are barred 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.

However, 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 who enroll veterans to count federal funds for 100% of their funding. Once a servicemembers’ funds have been used they can’t get them back.

The attorneys general specifically asked McDonald to restore these benefits to veterans who attended institutions found to use erroneous, deceptive, or misleading advertising, sales or enrollment practices.

“This relief should be provided when a regulatory or enforcement action is taken by the U.S. Department of Education, a State Approving Agency, or a State Attorney General after a showing of misconduct, or when a court enters a judgment against a school, or upon application by a veteran or group of veterans alleging that an educational program or college has been deceptive or misleading,” the letter states.

The states also seek to end the for-profit industry’s allegedly predatory marketing campaigns and aggressive recruitment of military members and their families by ensuring servicemembers are provided accurate information about the schools and informing them about the potential consequences of utilizing educational benefits at schools that have been subject to investigations or lawsuits.

“Specifically, we urge you to include additional conditions under which a ‘caution flag’ is
raised on the GI Bill Comparison Tool,” the letter states. “This tool could be further improved by flagging schools that are the subject of investigation or lawsuits filed by state agencies, including State Attorneys General and State Approving Agencies.”

The AGs also urge the VA to support the efforts of state approving agencies and other offices.

“We urge you to ensure that the VA is working collaboratively with and supporting the efforts of the State Approving Agencies and Attorneys General in this context,” the letter states. “It is only through such collaboration that we can protect our student veterans and prevent future misconduct.”

Legislators and regulators have recently taken a tougher stance when it comes to for-profit colleges and veterans and servicemembers.

In October, the Department of Defense put University of Phoenix on probation, meaning the school is barred from recruiting on U.S. military installations, and its participation in the DoD Tuition Assistance Program for active duty military personnel is on hold.

According to an earlier report from Reveal, the University of Phoenix received $20 million in military tuition assistance from the Pentagon last year and $1.2 billion in GI Bill benefits since 2009.

The Department of Defense announced it would take the University of Phoenix off probation, allowing the school to once again recruit on military bases and participate in servicemember tuition assistance programs.

The DOD freed the company of its probationary status based on an internal review, the school’s response to department concerns, and university administrators’ cooperation.

The college chain will still be subject to a “heightened compliance review” for a year, according to a Defense Department official.