Are For-Profits Taking Advantage of Military Servicemembers and Veterans?

Last week, the Government Accountability Office (GAO) released another report that called for increased oversight of for-profit schools. The report focused on the Military Tuition Assistance Program (TA), which is used to pay for active service members who pursue education off-duty. The popularity of this program has increased dramatically in the last few years as distance learning courses, largely provided by for-profit schools, have become more available. In fiscal year 2009, the Department of Defense (DOD) spent $517 million on 377,000 service members in this program. An active duty service member can receive up to $250 per credit with a maximum of $4,500 per year.

The GAO program found that the oversight of the programs that received TA funds was inconsistent, and that often scrutiny of on-base classes, often offered by local community colleges or other institutions, were examined more closely than distance learning courses often provided by for-profit schools.

Additionally, the GAO report called for the DOD to implement a comprehensive complaint system to help curb “improper or questionable marketing practices. … In one case, a for profit school was found to be charging higher tuition rates to service members than civilians and offering service members a $100 gas cards upon course completion.” The school in question likely offered this incentive because TA funds aren’t distributed until courses or programs are completed.

DOD has pledged to step up scrutiny of this program, and at a hearing on this issue last week, Sen. Tom Carper (D-Del.) said, “While some for-profits return real value for taxpayers’ money, serious questions have arisen with respect to the recruiting practices of some for-profits to the quality of the education they provide. … Some schools come close to abusing our veterans.”

The GAO report and Carper’s hearing are part of a larger examination of the value of some for-profit schools and programs. The Department of Education has introduced—but not finalized—a controversial regulation called “gainful employment,” which would cut off federal financial aid to programs that have too-high default rates or debt-to-income ratios that make loan repayment difficult.

One reason eyes have turned to for-profits’ presence at military institutions is because, as Pat Garofalo reported for Think Progress, for-profit schools are prohibited by law from making more than 90 percent of its profits from Title IV funding—federally funded student loans and Pell grants—but funding tuition assistance funding from DOD or GI Bill funding from the Veterans Administration doesn’t count toward that 90 percent, even if it’s all taxpayer money. As the GAO report notes, “between 2003 and 2008, seven schools lost eligibility for federal student aid because of noncompliance with the 90/10 rule.” Hundreds more are dangerously close to this cutoff as it exists now.

In a later interview with The Chronicle of Higher Education, Carper said he would consider changing or reexamining this rule to include DOD and VA funds in the 90/10 rule. “"I'm a big advocate of skin in the game," he said told the Chronicle. "There has to be skin in the game for markets to work."

Kay Steiger is the editor of CampusProgress.org.

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