Are Shady For-Profit Colleges Preying on Veterans for Their GI Bill Benefits?

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By Herb Weisbaum

Since Post-9/11 GI Bill went into effect in August 2009, the federal government has paid more than $30 billion in tuition and benefits, the Department of Veterans Affairs said Friday. The VA said this money has now helped 1 million vets, service members and their families get college degrees or technical training.

Most of this money goes to for-profit colleges and universities. In fact, eight of the 10 schools receiving the most GI Bill dollars are for-profits, according to a 2012 report from the Senate Committee on Health Education Labor and Pensions (HELP).

The committee's chairman, Sen. Tom Harkin, D-Iowa, accuses some for-profits of using "predatory and deceptive tactics to target service members and veterans for enrollment" in order to tap their federal educational benefits.

For-Profit Colleges Charging More While Doing Less For Low-Income Families
Bloomberg via Getty Images
Last week, Harkin and Sen. Dick Durbin, D-Ill., introduced the Protecting Our Students and Taxpayers Act (POST), which would reduce the percentage of revenue for-profit schools can earn from federal financial aid to 85 percent, down from the current 90 percent.

Durbin believes too much federal money is going to an industry that "often provides a greater return on taxpayer investment to its administrators and investors than it does to its students."

The for-profit educational industry calls the POST Act unnecessary and warns that it would harm all students looking to get a post-secondary education.

"The industry is not ripping off military students. We have many schools that are supporting military members to get a quality education," said Michael Dakduk, vice president of military and veterans affairs at the Association of Private Sector Colleges and Universities. "There are good and bad actors throughout the entire spectrum of higher education. We want to make sure that veterans, service members and their families have the best education and resources to choose an educational institution. And we're going to continue to work on that to develop best programs and services."

Profit Is Not a Dirty Word

There's nothing wrong with an educational institution making money, but there is a growing sense among government regulators that some of these schools take federal money and don't deliver on their promise of providing degrees that lead to good jobs.

"We are very concerned about false claims about graduation rates, placement rates and possible earnings after graduation," said the Federal Trade Commission's Lois Greisman. "Not only are false claims unacceptable, they're illegal. We're looking into this. It's a top priority for the agency, and if we find schools that are violating the law, we plan to take appropriate action."

Holly Petraeus, who helps run the Office of Servicemember Affairs at the Consumer Financial Protection Bureau, said some for-profit schools serve military students well and give them a good education that can lead to civilian employment.

"But there have definitely been some that see it more as a profit-making exercise," Petraeus said. "They spend a lot more money on recruiting than actual counseling or concern about graduation rates and gainful employment."

A Soldier's Story

When Mae McGarry left the Army and returned to civilian life in Erie, Pa., she decided to pursue a degree in criminal justice and psychology. She found an online program with a for-profit university that would give her the flexibility she needed to take care of her kids.

After three years, McGarry decided to switch schools when she realized her school did not have the proper accreditation. That meant many potential employers would not accept her degree.

To make things worse, the credits she had earned during those three years could not be transferred to the new school she wanted to attend.

"I'm angry. I'm very angry," she said. "I was basically duped out of my GI benefits."

Having exhausted all of her federal benefits, McGarry had to take out loans to complete her education. She's now $64,000 in debt.

"They got thousands of dollars that I can't get back, but I have to pay back. I'm very angry to say the least," she told me.

Trying to Help

Matthew Boulay, a former Marine who served in Iraq, doesn't like what he sees. He believes some for-profit schools "target" young vets to get their GI benefits.

"It's not just over-promising," Boulay said. "In some cases, it's fraud."

For example, vets who are assured their GI benefits will cover everything may find out after they enroll that those benefits have run out and they will need to take out a sizable loan at a high interest rate.

Boulay runs the Veterans' Student Relief Fund, a new nonprofit that's fighting for more regulation to protect vets who use their GI benefits. Working with the Iraq and Afghanistan Veterans of America, it gives grants of up to $5,000 to vets struggling to pay off the debts they incurred at for-profit schools.

One of those grants went to Jonathan Ngowaki, who served as a Marine Corps radio operator in Afghanistan. When he came home to Beaumont, Calif., in the summer of 2010, he enrolled in a for-profit college. He hoped it would help him land a good job in IT management.

Ngowaki told the school's financial advisor he did not want to take out any loans-just use his GI benefits. But, he wound up with a $15,000 loan. Ngowaki said he was tricked into signing the paperwork.

"I went into the military, so I wouldn't have college debt, but now I have this debt and I have a family and it's taken that money away from my family," he said. "It's all about the money. It's all a money game. It really bothers me."

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24 Comments

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Richard

I don't blame the schools; I blame the VA for not vetting these schools and for approving every snake oil salesman that comes down the pike. The vets and active duty troops don't pay for these schools themselves, so the blame belongs to those at the VA who approved all of the non-regionally accredited and fly-by-night schools (Phoenix, Kaplan, and other large non profits don't really count in that group though)

November 12 2013 at 10:32 AM Report abuse +1 rate up rate down Reply
brianp67

the government allows this to happen as far as I see it and yes I use to work for the gov and see what goes on even through the VA if the school is a yellow ribbion member then the gov allows the school to recive funds most of the schools that pepole go to want a program that most tradtional colleges don't offer example calstate univeristy dosen't offer cj where as westwood would offer such programs cummunity college offers programs in emt cert but the prespective student should ask the questions interms of the funding and cost as to taking advantage of veteran students that is a lie while attending itt tech 40 precent of the school students were vets alone conderding I went to sylmar CA if it were san diego of course there would be a higher vet to non vet ratio the oldest was a 25 year carrer army vet me I was 20 years and the youngest 4 year vet most not all employeers reconize the school you went too not everyone can attend an ivy legue school nor could afford such an education not to mention any living expense associated but as I said if you can't afford a house you cant affod school no matter what the outcome

November 12 2013 at 10:26 AM Report abuse rate up rate down Reply
brianp67

if you go to a school that agerssive advertise then avoid that school period like ICDC granted I never went no school can promise or gurantee a job after completion lets say you have a degress in Criminal justice and you have lets say 50 students in the core class only 1 and 5 will get a job in that field the main stream is being able to meet the hiring critera for that agencey that you are applying for it helps to have a degree but you are not total expert either only experince makes you an expert like an example ICDC use to run an add to train for homeland security one tsa has no gear of any kind and about 90 precent of the students who actually get a degree or a certificate of completion actually get hired in not to mention 95 precent of folks who do go into lawenforcement can't handle the job period even I have a BS in criminal justice am teaching the subject matter rather then working in the field another aspect is I plan on getting my Doctrate the gi bill paid for my BS in which I saved my housing stifiend to pay for my doctrates
the bottom line is if you are going to face a debt load don't carry on the debt just say no knowing you can't pay off the debt no matter what the sales man says everyone wants a so called better life but no degree can get you there now for the accreditdation of the matter there is regional and accreditation I have a friend who went from Itt tech to the University of phoniex itt tech gave him 86 credits for an as in crimnal justice but when he went for his BS in the same field the UOP gave him 43 to start but the bottom line is all about money even he would goten into cal state university he would start off with 10 credits which means he would of have to pay for 110 credits of his own but his remainder of the gi bill is 20k out of 60k but he plans on not to continue if he can't pay down the debt load the only way possible is to save the housing stifend for 13 months
at a rate of 2k per month so a total of 44k is already paid leaving him with a 16 k debt load which is ok it is a new car and the best news that student loan is for 10 years

November 12 2013 at 10:07 AM Report abuse rate up rate down Reply
Ed

In 1973 I used 10 years of GI education benifits , got $400 a month , my employee reimbused me $200 a month for education . Went to regular college for first 5 years , always cut final so I could take same class's over , college got smart and wouldn't allow any more failures , so I found business school that as long as you were there for attendence you could leave and they would sign GI form , did that for other 5 years . And I was upset I got drafted so I got more then even .
Guess VOLAR Army vets ain't figured game out yet .

November 12 2013 at 8:42 AM Report abuse -1 rate up rate down Reply
maloontransllc

Preying on the poor who are trying to better themselves thru education, the greed is at all time high and is ******* the life out of our country. How shamefull

November 12 2013 at 8:35 AM Report abuse -1 rate up rate down Reply
1 reply to maloontransllc's comment
brianp67

poor or rich it dosen't matter what matters are most of the pepole who do attend these schools don't do the research intems of cost if they can't afford a house how can they afford to go to school the gi bill was just to give you a boost and not actually pay for the entire education it is for 3 years not 4 which makes no sense you have to shop around and making a big boy or girl decssion school is great if you are not working

November 12 2013 at 10:11 AM Report abuse rate up rate down Reply
willypfistergash

Satiamman = professional victim

November 12 2013 at 7:35 AM Report abuse rate up rate down Reply
DANIEL

I was stationed at Fort Bragg and signed up for an off postccomputer class paid full amount somewhere around Four thousand dollars after three weeks they closed up and left that was back in 1976 now it is 1992. And sign up classes and they denied me because I had a balance from that class back at Fort Bragg

November 12 2013 at 1:44 AM Report abuse rate up rate down Reply
realrambo

Having work for a for Profit institution , it was nothing but a Fraud , and still is
false promise :
alumni services when they did not have one
salary above the range of people with 20 years experiences
guaranteed job , most end up at minimum wages no where .
Accreditation is a Joke , the way they go around it is saying we are enhancing students services when in reality they were simply "screwing everyone"
No oversight , student went in the street to protest , same block than Federal building , nothing happen .
until one of them file a law suit , none of the regulator were ever involved , they simply did not care . And it has not changed a bit .
Accreditation has no value whatsoever , and yes for having been part of it for profit college is a flat out dirty word , if a student cannot repay his / her tuition in 3 years then they are wasting their money. in this case defrauding the tax payer , name one organization and look at it closely I guarantee you more dirt than a bag of potting soil .
The way it worked we will do it with or without you , then you will have to do without ....
I have yet to see the Federal gov revoke their license
To put it even on a different light they were so crooked even the Family of a decease instructor could not liquidate the 401k mine took years of fighting . they have their corporate office in deerborn Michigan if I am not mistaken , not a single one of the so called teaching school they run have a positive review yet they are all accredited . Sir with all due respect you are wrong .

November 11 2013 at 11:52 PM Report abuse rate up rate down Reply
Tina Angel

I didnt even read this but I will... I know for a fact that they do... People who dont know better or how/wither to look at graduation/retention rates and debt of the median student. My mother-in-law has fallen prey to them shes in her late 50's and needed online schooling since walmart doesnt work with students schedules they convinced her if she went back to school though them she would be marketable once she finished. nows she in double digits in loans and going back for something else. When I told her our local community college offered almost all of its classes online she didnt even bother looking in to it she just assumed shed still have to go to some classes which isnt the case now a days. My sister in law is now trying to follow this same path...

November 11 2013 at 10:10 PM Report abuse rate up rate down Reply
1 reply to Tina Angel's comment
santiamman

Better your sister-in-law should just take the money to Vegas and blow it having fun. She won't come away any more marketable or educated if she gave it to the for-profit.

November 12 2013 at 4:54 AM Report abuse rate up rate down Reply
foxylynx

Shut these predators down - they prey on everyone.

November 11 2013 at 7:16 PM Report abuse +1 rate up rate down Reply
1 reply to foxylynx's comment
willypfistergash

Who do they prey on, dumb people?

November 11 2013 at 9:56 PM Report abuse -2 rate up rate down Reply
1 reply to willypfistergash's comment
santiamman

Well, yes. But there's more to it than that. They prey on veterans and military members about to leave the military (and entitled to the targeted GI Bill benefits). They prey on minorities. They prey on poor and poorly educated people who want a better education to get ahead. The common thread is they prey on people who do not have the background to know anything about selecting colleges, or accreditation, or that there are good school, bad schools, and these scams. Lots of kids come out of high schools today where any form of guidance counseling or college advisory services have long ago been eliminated by budget cuts. They see a slick, seductive TV ad promising quick entry into lucrative positions in exciting -sounding fields, and they fall for them. Legitimate colleges don't run TV ads like that. You can say the students should do their own due diligence and find out about college selection, and you'd be right. But the fact is that many do not even know that, or that there is a difference among the colleges, and if they did, they would not know how to become informed.

November 12 2013 at 5:04 AM Report abuse rate up rate down