College militaryLast week, President Barack Obama signed an executive order to protect veterans, current members of the military, and their families from deceptive marketing practices that some for-profit schools are using to target them for their military benefits.

In his speech, Obama promised to put an end to recruiting strategies that he said "swindle and hoodwink" our troops and their families into making decisions against their best interests.

Let's take a look at some of the shady behaviors that set him off, and how the new executive order targets them.

Swindles and Hoodwinks

Here are a few of the shady recruiting habits Obama highlighted in his speech:
  • "They'll say you don't have to pay a dime for your degree, but once you register, they'll suddenly make you sign up for a high-interest student loan."
  • "They'll say that if you transfer schools, you can transfer credits. But when you try to actually do that, you suddenly find out that you can't."
  • "They'll say they've got a job placement program when, in fact, they don't."
Obama's speech also highlighted a particularly egregious case: "One of the worst examples of this is a college recruiter who had the nerve to visit a barracks at Camp Lejeune and enroll Marines with brain injuries -- just for the money. These Marines had injuries so severe some of them couldn't recall what courses the recruiter had signed them up for."

Other scandals involve for-profit schools that have apparently used dishonest tactics to lure troops and veterans. The Student Veterans of America recently discovered that, in an effort to appear "veteran friendly," several schools may have established fake SVA chapters that were run by school administrators. This violates the SVA's rule requiring SVA-chartered chapters to be established and run by student veterans.

SVA Executive Director Michael Dakduk lamented, "It appears that some for-profit schools do not understand our model, or worse -- they understand our model and they choose to exploit it for personal gain." Among the schools for which the SVA revoked chapter membership were institutions connected with Education Management (EDMC), ITT Educational Services (ESI), and DeVry (DV).

Obama suggested that it is time to put an end to scams and to follow through on the promise to give troops "an America that will forever fight for you, just as you fought for us."

Making Scammers' Lives Harder

Obama's executive order contains provisions that strive to make it harder for recruiters to scam veterans. The order:
  • Requires schools that receive money from the Tuition Assistance Program for active-duty service members to provide students with a "Know Before You Owe" form that outlines details about tuition, fees, student-loan debt, qualifications for financial aid, and graduation rates.
  • Specifies that the same regulations apply to military education benefits as apply to other student-aid programs.
  • Orders the Department of Veterans Affairs to trademark the term "GI Bill" to strengthen the government's ability to crack down on fraudulent and otherwise deceptive uses of the term.
  • Directs the Defense, Education, and Veterans Affairs departments to consult with the Consumer Financial Protection Bureau and Department of Justice to develop a centralized complaint system. It also calls for the Departments of Defense and Veterans Affairs to strengthen their enforcement and compliance functions so they can carry out effective responses to complaints.
  • Requires the Department of Defense to create a set of rules to regulate the way in which educational institutions can access military installations. The ultimate goal is to keep out "bad actors."

Obama's executive order has not received universal approval. Steve Gunderson, former congressman and current CEO of the Association of Private Sector Colleges and Universities, expressed disappointment that Obama bypassed Congress' current bipartisan efforts to reach a compromise on these issues.

Others are worried that the order doesn't go far enough to address the fundamental problems in for-profit education. For example, current regulations still allow veterans' benefits to count toward the 10% of revenue they are required to get from sources other than federal student aid.

No one wants for-profit schools taking advantage of American troops. But the question remains: What is the best way to achieve that goal?

Motley Fool contributor M. Joy Hayes, Ph.D., is the principal at ethics consulting firm Courageous Ethics. She doesn't own shares of any of the companies mentioned. Follow @JoyofEthics on Twitter.

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May 07 2012 at 4:35 PM Report abuse +1 rate up rate down Reply

It is unbelievable that in our society these charlatans and rip-off artists aren't put behind bars. This is another example of what happens when you don't have the proper amount of financial regulations in place. It happens on Wall Street and it happens at these F'd up schools. It's bad enough that "real" colleges and institutions have come to rip-off students. However, these lesser institutions are even worse. Like someone said, the diplomas they issue aren't often worth the paper they are printed on. And, to try and take advantage of our military is as unconscionable as anything Wall Street has pulled off and gotten away with. Remember, its the tax payers in this country who are left holding the bag paying for all this BS when these student loans go into default.

May 07 2012 at 4:06 PM Report abuse rate up rate down Reply

As a military spouse who just went through college, I am glad to see this action being taken. Those of you complaining dont realize the lengths lesser reputable schools will go through to get that military servicemembers money. How would you like to enroll in a college and find out that b/c your classes are online (so you can finish them while deployed) you dont have an actual instructor to call if you have questions? The course material is uploaded, you finish it, turn it in and someone grades it...but theres no tutors available if you dont understand. The diploma mills dont tell you this ahead of time. Worse yet, in the example cited in the article, a college recruiter enrolled marines with brain injuries that prevented them from remembering what course they signed up for....just how do you think they are going to do their schoolwork if they cant remember 5 minutes ago? There are a lot of unscrupulous business owners out there who think nothing of taking advantage of a military servicemember. Most recognize that the average servicemember is young, has not had much experience in financial management, buying/renting property or cars or choosing a college on their own without parental advice. More savvy servicemembers will recognize 0% financing for military is a trap.. but even the most savvy servicemembers might be fooled by colleges that do nothing but produce diplomas that arent worth the paper they are written on.

May 07 2012 at 11:20 AM Report abuse +2 rate up rate down Reply

How unfortunate for Somey that he had to log in under all his different screen names to vote my comment down mutltple times. How sad for you dear. And you are quite silly too darling.

May 06 2012 at 7:30 PM Report abuse +2 rate up rate down Reply
1 reply to mrspelosi's comment

Someholes a SIMP!

Obamas a fiasco

May 06 2012 at 8:02 PM Report abuse +2 rate up rate down Reply

And King Canute ordered the tide not to come in. Wait until November.

May 06 2012 at 6:44 PM Report abuse +6 rate up rate down Reply

Obama gets re-elected

May 05 2012 at 10:46 AM Report abuse -4 rate up rate down Reply
2 replies to Somey's comment

Somey darling have you ever wonder what it would be like to live in reality dear? How utterly sad for you dearest. Perhaps you should lay off the sauce .

May 05 2012 at 10:34 PM Report abuse +2 rate up rate down Reply


May 06 2012 at 8:03 PM Report abuse +3 rate up rate down Reply
Welcome MSGT

Get ready for $7-8 gas under obama. (if we are lucky) Does he really think the oil companies care what he does. The oil companies will not lose a cent in profit. The gas buyer will pay deeply.

May 05 2012 at 8:52 AM Report abuse rate up rate down Reply
1 reply to Welcome MSGT's comment

Fortune 500 just put out their lastest report. Big Oil rules. Notice how we pay $4.00 a gallon for gas, pay them direct subsidies, give them tax breaks, and STILL blame Obama?

May 07 2012 at 6:17 PM Report abuse rate up rate down Reply

Obama is givng the Store away or in our case the country away. He just a second term no matter what it cost us. If you love and care for AMERICA you will tell him we can do without and Vote him out. Anybody but him even if its another DEM he has to GO

May 05 2012 at 8:21 AM Report abuse +1 rate up rate down Reply

Obama is pandering again.

May 05 2012 at 8:09 AM Report abuse +1 rate up rate down Reply

Obama has to fill the colleges up with people or his give away program wont work, Holder is a joke this man has done nothing for this country, now when people are called to jury duty they vote not guilty, if they wont go after the crooks we will let the others go to

May 05 2012 at 7:14 AM Report abuse -2 rate up rate down Reply