VA needs to tighten oversight of G.I. Bill

Friday - 9/23/2011, 5:20am EDT

Jared Serbu, DoD reporter, Federal News Radio

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Just two years into the new Post-9/11 G.I. Bill, new data show a huge chunk of the benefits the program gives to veterans is going to a relative handful of private, for-profit college chains.

The data comes from three Democratic senators, who are military veterans, and who said the revelations show the need for increased oversight of the program. The Post 9/11 G.I. Bill provides educational benefits to veterans who served following the Sep. 11 attacks.

Numbers publicized by the offices of Sens. Jim Webb (D-Va.), Tom Carper (D-Del.) and Tom Harkin (D-Iowa), found that almost a quarter of the funds that were disbursed to veterans last year under the Post 9/11 G.I. Bill went to just eight companies that run private, for-profit colleges. When all for-profit colleges are included, the ratio jumps to a third of all G.I. Bill funds.

Webb, the original sponsor of the bill, said the figures were troubling, but not because for-profit schools are inherently bad.

"There are for-profit institutions that are providing our non-traditional veteran population a great service," he said. "But with this amount of federal dollars being spent in this sector, we owe it to the taxpayers and to our veterans to carefully monitor and provide oversight."

The Senators contend that the billion dollars that went to the eight companies doesn't give taxpayers the biggest bang for their buck. They found that even though a third of all G.I. Bill funds went to for profit institutions, those schools served only a quarter of the veterans the bill covers. By contrast, public colleges and universities received 40 percent of the funds, but trained 59 percent of those veterans.

Deceptive marketing?

Some veterans groups contend some of the for-profit schools explicitly target veterans with aggressive and deceptive marketing campaigns.

"It's obvious to me that many of the predatory schools see military veterans as dollar signs in uniforms," said Ted Daywalt, the president of VetJobs. In the case of predatory schools, veterans service organizations contend the problem isn't just that they're expensive. Ryan Gallucci, a lobbyist for the Veterans of Foreign Wars, said the schools frequently have questionable accreditations. He said veterans tend to get lured in by marketing promises, not realizing until later that the degree they're pursuing isn't of much value.

"When schools prey on veterans, they quite literally steal their benefits," he said. "For example, a veteran may enroll at a predatory school, using up to two years of their G.I. Bill. At that point, the veteran realizes the program is worthless, withdraws and seeks education elsewhere.

Unfortunately, credits from the predatory school don't count. The veteran must start over, with four years of school ahead but only two years of benefits to pay for them. We're only two years into the new G.I. bill, so the VFW believes we have yet to see the worst of this phenomenon."

Carper, the chairman of the Homeland Security Committee's subcommittee on federal financial management, said the problem is one of misaligned incentives.

"These institutions are rewarded for enrolling veterans with a fully-paid for education, but they have too little incentive to make sure their graduates are prepared to head out into the workforce and begin productive careers," he said.

The Obama administration released new rules this summer that are intended to make sure students are prepared for "gainful employment" from colleges that get federal funding. The rules would measure schools on the basis of whether or not their students are able to repay their student loans.

90-10 rule needs changing

But critics of the for-profits say they're also operating under a negative incentive. Under a provision known as the 90-10 rule, colleges are not allowed to get more than 90 percent of their revenue from federal funds. However, money from the G.I. Bill doesn't count toward the 90 percent threshold; instead, it's counted toward the 10 percent of non-federal funding that schools must maintain, making veterans an even more attractive target for recruiting and marketing campaigns.

Curtis Coy, the deputy undersecretary for economic opportunity at the Department of Veterans Affairs, said proposals would count the G.I. Bill toward schools' maximum allowable federal funding are worth considering.

"However, such a change could cause some schools to exceed the 90 percent threshold and be at risk of losing eligibility to receive federal student aid," he said. "In order to ensure that veterans are not adversely affected, the manner in which such a change would be implemented is important. Implementing a statutory change in this area will also require collaboration across agencies to accurately identify the amount of dollars from various federal education benefit programs that flow to each higher education institution."