New Rules to Protect Veterans from For-Profit College Scams

Education Scams Target Student Veterans

For-profit colleges are targeting student veterans in order to collect their GI Bill benefits.

Last week, President Obama signed an executive order aimed at protecting veterans from the aggressive recruiting and deceptive advertising practices that have become the trademark of many for-profit colleges.

“I’ve heard the stories,” he said, addressing a crowd of soldiers at Fort Stewart, Georgia. “They’ll say you don’t have to pay a dime for your degree. But, once you register, they’ll suddenly make you sign up for a high-interest student loan. They’ll say that if you transfer schools, you can transfer credits. But when you actually try to do that, you suddenly find out that you can’t. They’ll say they’ve got a job placement program when in fact they don’t. It’s not right. They’re trying to swindle and hoodwink you.”

The new initiative is designed to enhance transparency, requiring schools to disclose more information to prospective students.

A System Taking Advantage of Service Members

For-profit colleges tend to seek out veteran students because of the “90-10” rule that requires all higher education institutions to receive at least 10 percent of their revenue from non-education department sources.  Because GI Bill funds count toward this 10 percent, one veteran student allows a school to have 9 other students whose tuition is almost completely covered by federal education grants and loans.

While the executive order does not address this issue, it does make it more difficult for colleges to exploit veterans for their benefits.  Here are some of the changes:

  • “Know Before You Owe”: These new forms, developed by the Consumer Financial Protection Board and Department of Education, will now be required in order for schools to receive GI Bill funds. The forms outline everything from tuition, fees, expected student-loan debt, availability of financial aid, and graduation rates for each school.
  • Restricted access for college recruiters on military installations: This comes after a recent Frontline report that a for-profit college was sending recruiters to a Wounded Warrior barracks at Camp Lejeune, North Carolina, and enrolling Marines with brain injuries who couldn’t even remember what courses they were taking.
  • Trademark the term “GI Bill”: There will be new restrictions on how for-profit schools may market themselves as military friendly. Some of the current websites paid to direct veterans to for-profit colleges include GIBill.Com, GIBenefits.com, GIBillAmerica.com and MilitaryGIBill.com. This will no longer be allowed.
  • Centralized complaint system: The VA, Defense and the Education departments are working with the Consumer Financial Protection Bureau and Department of Justice to develop a new complaint system for students using military education benefits to ensure schools using dishonest
  • Improved student support: Schools will be required to provide students with clear education plans, academic and financial counseling, and ensure that students forced to leave for service-related reasons are given the opportunity to re-enroll or get a refund.

Future Changes

Some organizations argue that the changes do not go far enough to protect student veterans. Iraq and Afghanistan Veterans of America (IAVA) Founder and Executive Director Paul Rieckhoff recently commended the president for the order, calling it “a bold step,” but added, “Our community needs the President and Congress’ continued leadership in the coming months to reform the 90-10 rule.”

According to a recent study commissioned by Iowa Democratic Senator, Tom Harkin, last year eight for-profit colleges received a quarter of all GI Bill benefits – about $636 million – and most had over a 50 percent dropout rate. The study also found it costs taxpayers more than twice as much to send a veteran to a for-profit school as to a public university.

President Obama’s executive order is a good first step, but additional changes will likely be necessary to ensure that for-profit schools are not taking advantage of student veterans.

Photo courtesy of Sean MacEntee.