April 27, 2012

President Obama To Issue Order Protecting Service Members and Veterans From Abuses By For-Profit Colleges

President Obama To Issue Order Protecting Service Members and Veterans From Abuses By For-Profit Colleges

Today, at Fort Stewart, Georgia, President Obama will sign an executive order to help active duty military members, veterans, and their families get the information they need to select college programs paid for with federal aid.  The order also strengthens oversight and accountability for schools that offer these educational programs.  Schools will be required to give prospective students key information like loan repayment amounts and transferability of their credits to other schools.  Some aggressive recruiting practices will be banned, and the government will trademark the term “GI Bill” to keep deceptive college marketers from using it.

Such reform is long overdue. For years, unscrupulous for-profit colleges have used misleading and coercive tactics to lure hard-working troops and veterans into programs that offer high prices, poor quality, and useless credentials, ripping off taxpayers and leaving students deep in debt.  Holly Petraeus, who handles veterans issues for the new Consumer Financial Protection Bureau, wrote this blog post describing some of the people she was met in her job:

–          An active-duty military spouse at Fort Campbell, Kentucky, was under the impression she was attending a “military-affiliated college” (she wasn’t; it was a for-profit school with no official military status).  After she filled out an interest form she was called 10-15 times a day until she enrolled.  When she had trouble logging on to her online class, she couldn’t get anyone from the college to help her.  She failed the class due to lack of access but was charged the full fee.

–          National Guard education officers in Ohio and North Carolina told me they are besieged by for-profit colleges desiring access to the troops.  They noted that if they hold a job fair, over half the tables may be for-profit colleges, and that servicemembers may see a school’s presence at a job fair as an implied promise that you will get a job if you graduate from that school.

–          A veteran at a forum I attended in Chicago, Illinois, had used up her benefits and incurred $100,000 in student loan debt for Bachelor’s and Master’s degrees from a for-profit college, but was unable to find an employer who was interested in her degrees. She was still working at the same job she had before she went to college.

Petraeus’s agency has created a new online tool, the Financial Aid Comparison Shopper, to help potential students compare education options and see graduation and retention rates.  They’ve also created a student loan complaint system. Government agencies including the Departments of Justice, Education, Veterans Affairs, and Defense, and the Federal Trade Commission are beginning to work together on these matters.

Pressure has been building for the government to do more to help service members and veterans find educational programs that will help them and to guard against abuses. In addition to the impressive leadership of Petraeus, Senator Tom Harkin (D-IA) and some of his colleagues have recently introduced a series of bills aimed at protecting veterans and others from bad practices by for-profit colleges. For example, last week, Harkin and Senator Kay Hagan (D-NC) introduced a bill that would ensure your tax dollars are spent on educating and training students, rather than being wasted on advertising, marketing and recruiting.  Yesterday, Senator Hagan published an op-ed describing some of the experienced that convinced her to act:

Not long ago, a young man stationed in North Carolina was approached by a recruiter from a for-profit college. The 22-year-old had suffered a brain injury that impaired his ability to concentrate after artillery shells hammered his Humvee in Iraq.  At a barracks for wounded soldiers, the recruiter – who was illegally operating on a military base – persuaded this young man to sign up for online courses from the for-profit college. Later, when interviewed by a reporter, he could not even remember which course he was taking.

In March, Senators Frank Lautenberg (D-NJ) and Marco Rubio (R-FL) introduced a bill to provide every veteran who receives education aid from the Department of Veterans Affairs with counseling to help make the right choices; the bill also would set up a system to track veterans’ complaints of waste, fraud, and abuse by schools.  Big for-profit colleges have worked against many of these bills. (Meanwhile, in the House of Representatives, the entire Republican caucus, and a good number of Democrats, seem to enjoy the benefits of for-profit college campaign contributions and seem eager to do the industry’s bidding.)

Critically, many leading veterans and service organizations now take a strong stand in favor of curbing for-profit abuses. They have supported the various Senate bills and pressed the White House for action. And this week, Student Veterans of America revoked the charters of 26 of its chapters, all at for-profit schools, because they were sham groups with no students members, set up by for-profits in order to market their schools as “veteran friendly.” The group’s executive director, Michael Dakduk, said, “This is an extreme example of misrepresentation. There is a pattern of impropriety among certain for-profit institutions of higher learning.”

All of these developments are good news for veterans and other students, for taxpayers, and for the growth of the U.S. economy. It will also be good news for those for-profit colleges that rise to the occasion and begin competing to help students learn and train for the new economy. But it could be bad news for the many for-profit colleges that have pursued a business model based on low quality, high prices, and running to Congress  for protection, armed with expensive lobbyists and big campaign contributions, when faced with efforts to hold them accountable.  The more voters are aware of bad practices in this industry, and the more they make clear, through emails and town hall meetings, that they are tired of members of Congress defending these bad actors, the more likely it is that reforms will take hold.

UPDATE: Steve Gunderson, CEO of the biggest for-profit college trade association, APSCU, issued a statement calling the Obama order to protect America’s troops and veterans a “deeply unfortunate development.” Gunderson explained that his group “is disappointed” that President Obama “decided to bypass the Congress to address these issues with an Executive Order,” when APSCU was working these issues on Capitol Hill. Given that APSCU has consistently worked in close coordination with the House of Representatives Republican leadership and other friendly Members of Congress to derail attempts to hold the industry accountable, we understand that Gunderson’s industry overlords are disappointed. But when you consider the accounts provided by Petraeus and Hagan above, and those of men and women I’ve met, like Adam Gonyea, it becomes clear that APSCU’s loss is America’s gain.