Jack Shakely: Some for-profit colleges are preying on returning veterans

By JACK SHAKELYNovember 17, 2012 

If ever there was a poster child for the law of unintended consequences, it is the Post-9/11 GI Bill.

Through the years, few government programs have enjoyed the almost universal approval of the GI Bill, enacted in 1944 and expanded in 1966. I'm one of its fans: It helped me buy my first home (a bungalow in Hermosa Beach) and sent me to law school.

As the U.S. military became all volunteer in the 1970s and America enjoyed more than a quarter-century of peace, the GI Bill seemed less necessary and its benefits dwindled. The 1984 version, called the Montgomery GI Bill, looked more like a Roth IRA than a veteran's benefit, with a requirement that service members contribute $100 a month for up to a year while on active duty to qualify for post-active-duty educational benefits. The kicker was that you had to put your money in up front and if you then decided not to go to college after you left the military, you lost your dough.

A lot of vets asked, "Why bother?"

The perceived parsimony of the diluted GI Bill ended with a bang in 2008 with the passage of the Post-9/11 GI Bill. This bill, which was augmented in 2011, focused on education and retraining, and reflected the nation's grateful thanks to troops returning from years of combat in Iraq and Afghanistan. The legislation provides generous payments for public or private college tuition, a housing allowance for full-time students that amounts to about $1,200 a month and up to $1,000 a year for books.

The latest bill also contains two provisions -- one a bureaucratic head-scratcher, the other well intended but often counterproductive -- that turn the returning veterans from honorees to prey.

The predators are for-profit universities, which provide by far the lion's share of education to our returning GIs.

In August, Democratic Sen. Tom Harkin of Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, issued a scathing report on for-profit universities. Harkin's statement said there was "overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcome, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation."

The report held out special opprobrium for the ambulance-chasing recruiters who saw returning veterans as low-hanging fruit, or, as the report says they are known in the industry, "dollar signs in uniform."

These recruiters -- and there are 35,000 of them nationwide, 10 times the number of job and career counselors employed by for-profit universities -- have been known to recruit at Wounded Warriors centers and at veterans hospitals, where they can corner bedridden GIs and entice them with promises of free education and more.

The "and more" is made up of those problematic provisions of the Post-9/11 GI Bill.

The bill provides a $684 "housing" allowance even if a veteran attends college online and the school has no real campus, let alone room-and-board fees. This allowance is sent directly to the veteran. The for-profit recruiters can sell returning troops on the premise that not only will their tuition and fees be covered but that $684 a month goes into his or her pocket.

The allowance might be meant to help defray living expenses, even for online students, but it's essentially free money that would be hard for anybody to resist. It might partially explain why vets with little interest in education would enroll in online programs. (About two-thirds of these schools' online students leave without getting a degree, but then so do most of their regular students.)

It's another part of the bill, however, that really makes our returning veterans "dollar signs in uniform." To receive government grants and loans, a university must demonstrate that at least 10 percent of its income comes from sources other than federal financial aid. This is a no-brainer for schools like UCLA and Loyola Marymount. But for-profit schools, such as Kaplan University and the University of Phoenix, have a hard time hitting the mark -- or would, except for the Post-9/11 GI Bill. That's because all Post-9/11 GI Bill payments, taxpayer money pure and simple, do not count as federal aid because they don't come from the Department of Education. Go figure.

The University of Phoenix figured it out. It got $1.2 billion in federal Pell grants in the academic year 2010-11, and $210 million in Post-9/11 GI Bill payments, thereby making its

10 percent mandate. It's small wonder that its recruiters would pay special attention to our men and women coming off active duty.

For-profit universities have every right to sell their educational wares, regardless of their merit and expense. But the unintended consequences of these provisions of the Post-9/11 GI Bill breed academic failure, waste taxpayer dollars and do not accomplish the things our grateful nation intended. The GI Bill is broken and needs to be fixed.

Jack Shakely is president emeritus of the California Community Foundation.


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