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By Spring 2019 M-VETS Student-Advisor Casey Hunt

The G.I. Bill was created to give veterans access to higher education and training as a way to help transition back to civilian life after they honorably served their country. For-profit universities, however, often take advantage of veterans using their G.I. Bills to provide subpar education and below average job placement rates. The Department of Education has been in the process of creating a new rule regarding what standards for-profit colleges and universities must meet in order to use federal funding for over two years. Until the Department of Education creates a clear rule for these institutions, veterans should be wary of using their G.I. Bills at private, for-profit colleges and universities.

The G.I. Bill and Tuition

There are several different G.I. Bill benefits available for veterans and servicemembers. One, known as the “Post 9/11 G.I. Bill,” was passed in 2008 for veterans and servicemembers who served in the Armed Forces after September 11, 2001 or their families.[1] The federal government also provides the Montgomery G.I. Bill for active duty servicemembers and reservists or their families.[2] The G.I. Bill benefit was more recently updated with the passage of the “Forever G.I. Bill” in 2017, but the VA is still working on implementing the new changes.[3]

The average cost per year of a four year degree from a public institution as of 2016 was $19,189, whereas the average cost per year of a four year degree from a private institution was $39,529.[4] Tuition rates have been increasing across the board since the Department of Education was created and there are no signs of the trend slowing down.

One study shows that as Congress increased the G.I. Bill benefit, for-profit universities increased their tuition.[5] On the other hand, for-profit universities have criticized these types of studies because they may not account for online programs, as online programs are less expensive than traditional programs and would decrease the average tuition amount at for-profit schools.[6]

Background on For-Profit Colleges

Beginning in 2013, states and the Consumer Financial Protection Bureau brought lawsuits against one of the largest private for-profit college entities in the United States, Corinthian Colleges.[7] Prosecutors argued that Corinthian defrauded its students by targeting low-income individuals and promising high job placement rates.[8] Despite these promises of job placement, the for-profit university’s actual rate of job placement ranged from zero to twelve percent across its campuses. For-profits also misrepresented their graduation rates and potential earnings of graduates to entice more students to enroll in their programs.[9] With false promises and flexible scheduling of classes, for-profit advertising attracted millions of students.[10]

Today, for-profits must meet two requirements in order to receive federal funding – they must receive at least ten percent of their funding from private sources, what the Department of Education calls the “90/10 rule,”[11] and they must show that their programs prepare students for “gainful employment” after graduation.[12] While a new measurement of “gainful employment” is still being discussed in the Department of Education, the current measurement of gainful employment looks at a student’s debt-to-earnings ratio.[13] At a for-profit university, if an average student’s annual loan payment is higher than eight percent of their total earnings, that college has not met the gainful employment requirement.[14]

Many students have asked the Department of Education to excuse their student loans because they were defrauded by for-profit colleges. This has proven to be an uphill battle, as only around 22 percent of borrowers of the over 218 million applications since 2015 have been granted some type of debt relief by the end of 2018.[15] Of those approved applications, 68.7 percent received full debt relief and 31.2 percent received partial debt relief.[16]

For-Profits and Veterans

One of the groups most affected by these for-profit misrepresentations is veterans. The G.I. Bill, under the “90/10 rule” counts as private funding.[17] Because of the rule, for-profit universities disproportionately targeted veterans to meet the ten percent private funding requirement.[18] A Senate report from 2012 showed that for-profit institutions sent recruiters to veteran hospitals and wounded-warrior centers to enroll more veterans.[19] Even with their G.I. Bill benefit, veterans are still not able to cover the cost of higher education and must take out more loans to cover their tuition and living expenses while studying. When for-profit colleges underdeliver, veterans are then stuck with federal loans that they cannot pay off.

Without proper federal oversight, veteran advocacy groups found that underperforming for-profit colleges could receive $2.3 billion in federal money.[20] Those groups have called on VA Secretary Robert Wilkie to limit the use of G.I. Bills at for-profit institutions.[21]

To be sure, not all for-profit institutions take advantage of their students and some for-profit institutions offer flexible, online options that work better with the schedules of veterans who have families or are working while they earn their degree.[22] Additionally, online colleges can adapt quicker to the changing job market, providing training for the most in demand skills.

Taking Extra Care

Choosing a path to higher education is daunting enough without the fear of being saddled with student loan debt for years after receiving a diploma. In light of the unclear regulations by the Department of Education and the silence from the VA regarding for-profit schools, veterans and servicemembers should take extra care when determining where to use their G.I. Bill. This means looking beyond a school’s own website at third-party rankings, accreditation boards, and rates of student debt. A little extra time spent researching before committing to a program can save thousands of dollars in the long run.

[1] 38 U.S.C. § 3311 (2018).

[2] 38 U.S.C. § 3011 (2008).

[3] Forever G.I. Bill: Early Implementation Challenges, Department of Veterans Affairs Office of the Inspector General (Mar. 20, 2019), https://www.va.gov/oig/pubs/VAOIG-19-06452-97.pdf.

[4] Digest for Education Statistics, U.S. Department of Education, National Center for Education Statistics (2018), https://nces.ed.gov/fastfacts/display.asp?id=76.

[5] Greg Toppo, For-Profit Tuition Rises as GI Benefit Grows, Inside Higher Ed (May 29, 2018), https://www.insidehighered.com/news/2018/05/29/study-profits-raise-tuition-post-911-gi-bill-benefit-grows.

[6] Id.

[7] See Consumer Fin. Prot. Bureau v. Corinthian Colleges, Inc., 2015 U.S. Dist. LEXIS 178105 (N. D. Ill. 2015).

[8] Id. a 7-8.

[9] Id. at 8.

[10] For-Profit Colleges by the Numbers, Center for Analysis of Postsecondary Education and Employment (last accessed May 6, 2019), https://capseecenter.org/research/by-the-numbers/for-profit-college-infographic/.

[11] 34 C.F.R. § 668.14(b)(16) (2014).

[12] 20 U.S.C. § 1001(b)(1) (2011).

[13] 34 C.F.R. § 668.403(a) (2017).

[14] Education Department Releases Final Debt-to-Earnings Rates for Gainful Employment Programs, U.S. Department of Education (Jan. 9, 2017), https://www.ed.gov/news/press-releases/education-department-releases-final-debt-earnings-rates-gainful-employment-programs.

[15] Borrower Defense to Repayment Loan Forgiveness Data, Office of Federal Student Aid (Dec. 2018), https://studentaid.ed.gov/sa/about/data-center/student/loan-forgiveness/borrower-defense-data.

[16] Id.

[17] Karina Hernandez, Why These Veterans Regret Their For-Profit College Degrees — And Debt, PBS (Oct. 23, 2018, 2:22 p.m.), https://www.pbs.org/newshour/education/why-these-veterans-regret-their-for-profit-college-degrees-and-debt.

[18] Id.

[19] Danielle Gabriel, Veterans groups ask VA secretary to keep GI benefits out of the hands of predatory colleges, Washington Post (Feb. 20, 2019), https://www.washingtonpost.com/education/2019/02/20/veterans-groups-ask-va-secretary-keep-gi-benefits-out-hands-predatory-colleges/?utm_term=.2c30791ac905.

[20] Id.

[21] Id.

[22] Carrie Sheffield, In Defense of For-Profit Colleges, Forbes (May 29, 2015), https://www.forbes.com/sites/carriesheffield/2015/05/29/in-defense-of-for-profit-colleges/#40100dbb1836.