Regulations turn veterans into 'dollar signs,' argues report

Veterans are a lifeline to for-profit schools—for now

Congress is considering rolling back a loophole that encourages for-profit colleges to recruit military veterans aggressively, The Atlantic's Alia Wong reports.

For-profit schools recruit many low-income students and, as a result, depend on federal aid to fund their operations. However, since 1998, federal regulations (often known as the 90-10 rule) have prohibited for-profit schools from receiving more than 90% of their funding from the federal government.

But financial aid provided to military veterans doesn't count towards the 90% cap. And according to a 2012 report released by the U.S. Senate education committee, the loophole has led to the aggressive recruitment of veterans that some critics say amounts to abuse. "This loophole creates an incentive to see service members and nothing more than 'dollar signs in uniform,'" the report reads.

According to the Center of Investigative Reporting, 160 for-profit colleges—including well-known schools such as University of Phoenix and Kaplan—receive more than 90% of their funding from the federal government when military benefits are included. In the past five years, 40% of GI Bill education benefits have gone to for-profit colleges.

The Senate report and increased media scrutiny helped spur a number of investigations of the for-profit sector, including the one that led to the downfall of now-bankrupt Corinthian Colleges. Other initiatives, such as the Obama administration's gainful employment rule, have also put pressure on the industry.

Waiting on Congress

Yet, Wong writes, Congress has done little to fix the military benefits loophole or pass other regulatory reforms. While for-profit colleges have spent large sums of money lobbying Congress on the issue, they also have an unlikely ally in some nonprofit colleges that are wary of additional federal regulation. 

DOE announces 'gainful employment' regulations, receives criticism from all sides

Legislation to fix the loophole was introduced by Democrats this month. Previous bills that address the topic were never brought to a vote, but advocates hope this time is different. Now, backers have been joined by the Iraq and Afghanistan Veterans of America.

However, bringing the vote to the floor will ultimately depend on Lamar Alexander (R-Tennessee), chair of the Senate education committee. Alexander says the committee is examining "bipartisan" proposals as part of a rewrite of the Higher Education Act later this year but didn't say if he supports the funding legislation.

Meanwhile, the Association of Private Sector Colleges and Universities, which represents for-profit schools, is pushing back against the proposal. "The only effect that the proposed changes will have will be limiting access to education for the students who need it most," says Noah Black, a spokesperson for the group (Wong, The Atlantic, 6/24).

Thoughts on the story? Tweet us at @eab_daily and let us know.

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