Exploiting Veterans for Profit – The New York Times

Exploiting Veterans for Profit – The New York Times


Celia Jacobs

Despite efforts by Congress, the Obama administration and state attorneys general to stop the predatory practices of for-profit colleges, veterans and service members who rely on funding from the G.I. bill and the Defense Department to attend school are still being targeted by an industry infamous for saddling people with debt and useless degrees.

A Senate committee report sounded a warning on this problem three years ago, when it raised questions about deceptive practices in the industry. State attorneys general and federal agencies at the time were investigating seven for-profit outfits with significant revenue streams from the G.I. bill. Some of these schools have since been forced to shut down.

Nevertheless, a new analysis of federal data by Veterans Education Success, a nonprofit that provides free legal services to student veterans, finds that the for-profit industry is still setting its sights on veterans and service members even as its nonmilitary enrollment has declined.

The problem lies in what is known as the 90/10 rule, created by Congress in 1998. The rule allows for-profit schools to raise 90 percent of their revenue from federal student aid and requires them to raise the remaining 10 percent from other sources. The point was to prevent the government from supplying all of the revenue for low-quality schools that private citizens thought unworthy of their dollars.

But because of an oversight in how the law was worded, schools are allowed to count some federal money — from G.I. education benefits and Department of Defense tuition assistance — as privately raised. This has made veterans and service members a special target for high-pressure recruitment tactics and deliberate fraud.

The new report also shows that the schools that rely almost entirely on federal revenue — when veteran and Defense Department money is counted — are leaning more and more on veterans and service members. The number of schools that get more than 90 percent of revenue from the government grew to 192 from 133 between 2011 and 2013, the most recent year with available data — and such schools experienced a 60 percent jump in the revenue they received from enrolling veterans and service members.

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