This Veterans Day, for-profit institutions of higher learning across the nation are thanking soldiers for their service — and tuition checks.
Struggling with declining enrollment, for-profit colleges, universities and trade schools are increasingly turning to veterans and Uncle Sam to keep them afloat, a new study by a veterans' advocacy group shows.
Even as several high-profile, for-profit chains have collapsed following investigations into deceptive recruitment tactics and bogus graduation and job placement rates, veterans and service members represent a lucrative market for hundreds of schools that receive virtually all of their revenue from federal student aid, according to a report released Thursday by Veterans EducationSuccess. The Washington, D.C.-based group focuses on protecting veterans' educational opportunities.
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Among for-profit schools that received more than 90 percent of revenue from federal student aid and military educational benefits, tuition payments from the Department of Veterans Affairs and the Department of Defense increased by nearly 60 percent from 2011 to 2014, the study found. The total payout was more than $1.1 billion.
And that's an understatement, researchers noted, since the U.S. Department of Education data doesn't account for all GI Bill benefit programs.
Concerned that for-profits continue to exploit veterans, U.S. Sen. Tom Carper, D-Delaware, and othersreintroduced a bill this week to close a loophole in the law that allows for-profit schools to receive more than 90 percent of their funding from the federal government. The billwas supported by more than 25 Democratic senators.
Closing the federal loophole is a "common sense fixthat will help us improve educational outcomes for veterans and protect taxpayers," Carper said in a statement.
It's not the first time Delaware's senior senator, a Vietnam veteran, has tried to reform theso-called 90-10 rule.
Passed with bipartisan support in 1992, the rule bars for-profit institutions from receiving more than 90 percent of revenues from Title IV federal student aid. The law excludes GIbill benefits and the Department of Defense's tuition assistancefunds from the calculation. As a result, for-profit schools aggressively enroll service members and veterans using sly marketing schemes, according to the bill's supporters.
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It took less than an hour for former Army National Guard Sgt. Travis Craig to be accepted by the now-shuttered ITT Technical Institute. Admissions representatives never asked to see his academicrecords, he recalled.
"It’s been a horrible experience honestly," grumbled Craig, who was deployed to Iraq, Afghanistan and Kuwait before enrolling atanITT Tech branch in Las Vegas. Following a series of federal sanctions, the chainclosed its 130 campuses last year. The movestranded43,000 students, including some who had exhausted their GI benefits.
Six months before his networking technician program ended, Craig of Fort Meade, Maryland, dropped out of ITT after discoveringoutdated course materials, he said. Even with his military education benefits, the 32-year-old owes more than $5,000 in loans.
"Going to new colleges and having the admissions people tell you no credits transfer ... you pretty much lost a year and a half of your life," he said.
Craig wasamong the 83 percent of students enrolled at his ITT campus who didn't graduate within six years. Because for-profit schools charge an average of four times more than community colleges, they enroll 27 percent of all GI bill students but take in 40 percent of GI bill funds,according to recent research by Student Veterans of America.
Students who do graduate earnlow starting salaries andare saddled withsubstantially higher debt than those who attended community college, federal data shows.
Lack of accountability
In Delaware, the Department of Education doesn't track overall for-profit school enrollment or differentiate among for-profit and nonprofit institutions on its website.
More than 2,700 students participating in the government's various GI bill programs were enrolled in Delaware institutions last year, according to the most recent federal data. About 5 percent of those students attended for-profit schools here. Those numbers don't account for Delaware veterans who took online courses at for-profit schoolsbased elsewhere.
The state Education Department requires accreditation for degree-granting institutions, but Delaware'snearly 100 private business and trade schools specializing in fields like gun repair, truck driving and holistic midwifery, are exempt, department spokeswoman Alison May said.
One trade school, Dawn Career Institute, was the only Delaware school to fail federal financial responsibility measures in the 2014-15 academic year, the most recent year for which statistics are available. Dawn is accredited by the privateAccrediting Commission ofCareerSchools and Colleges.
The Wilmington Institute, offering classroom-based and online training for estheticians, massage therapists and medical and dental assistants, was among 252 schools that year that failed at least one federal accountability standard imposed by the U.S. Department of Education, according to a recent report by the left-leaning Center for American Progress. The report criticized the federal government for lax enforcement.
Financial responsibility measures an organization's overall financial health, includingrevenue versus liabilities and overall borrowing ability. Dawn, which enrolls three veterans out of 200 students,received a score of -1, the lowest possible.
In late 2015, theinstitute was purchased by Education Evolve LLC of York, Pennsylvania, which also owns acareer institute in Ohio.Joe Marino, the company's managing partner, said the federal data is reflective of Dawn's previousowner.
New leadershave turned Dawn around, he said. While declining to provide Education Evolve's most recent audit submitted to the U.S. Department of Education, Marinofurnished a recentaudited statement for the company with afinancial responsibility score of2.1, meetingfederal standards.
This fall, Dawn will be moving from a blink-and-you'll-miss-ittownhouse development off Lancaster Piketo a fully-equippedbuilding at 252 Chapman Rd. in Newark.
The school's on-time graduation ratesrangefrom 33 to 90 percent and job placement rates from 50 to 82 percent,depending on the program, according to data supplied by Education Evolve. Dawn receives88.2percent of its revenuefrom federal funds.
"The percentage is obviously dependent on the socioeconomic group you deal with," Marino explained. "We'd like to see it lower."
For-profit school meltdowns aren't common in Delaware. Last year, a Delaware Superior Court judge overturned the State Board of Nursing's decision to close Leads School of Technology because of poor student performance on licensing exams.The school, now renamed Adoni Health Institute and based in Newark, operates a licensed practical nursing program and enrolls mostly African immigrants.
While Leads missed state-mandated exam passing rates forthree consecutive years, Judge John A. Parkins, Jr., said the nursing board did not give school sufficient notice before yanking its approval. In 2014, the nursing board barred private nursing schoolCamtech from accepting new students for the same issue.
Camtech still operates nursing and information technology programs in Newport and Seaford, according to its website.
In 2013, the state Department of Education shut down KFW Medical Institute in Newark, after the school provided false, misleading information to prospective students, failed to adopt a refund policy and was in trouble financially, May said.
Two national chains approved by the state education department to operate in Delaware — University of Phoenix and Strayer University — were flagged in theVeterans EducationSuccess report.
For-profit giantUniversity of Phoenix, which closed its Wilmington branch last year and has seen its overall enrollment cut in half since 2010, benefited from a 20 percent increase in military education dollars from 2011 to 2014, the report found.
Strayer, which operates a branch in Christiana and recently announced a $1.9 billion merger with for-profit Capella Education, received about $438 million from the federal government in 2013-14, accounting for 90 percent of its budget, the research showed. That was a slight decrease from two years prior when the chain received almost 92 percent of its budget from federal dollars.
During the same period, the study found, for-profit schools saw a nearly $2 billion drop in Title IV federal student aid available to both veterans and non-veterans (from $8.7 billion to $6.8 billion), due to declining enrollments.
Representatives from the University of Phoenix and Strayer did not respond to requests for comment this week. For-profit proponents, such as the Association of Private Sector Colleges and Universities, have challenged the validity of federal metrics. They say that a few bad actors should notmalign an education sector that provides nontraditional, low-income students with flexible options.
Adam Sniffen, a former Army pilot living in Dover, recalls being heavily recruited in 2014 by a for-profit flight school, Upper Limit Aviation in Utah, back when the federal government didn't cap how much it would pay under the post-9/11 GI Bill for flight school tuition.
Sniffen, now 36 and planning to studymath at Wesley College this fall, didn't take the bait. Soon after, it was revealed that Upper Limit Aviation trained 12 veterans at a cost to the government of more than $500,000 each. Flight school training benefits were later capped at about $12,000 a year.
"There's only so much money," Sniffen said.
"If people are just wasting it or schools are just abusing it, then absolutely fix the problem."
Lion's share of complaints
Since 2012, the state education department has received no formal complaints against any higher education institution in Delaware, May said.
But students are complaining up the chain of command.
In a separate report released Thursday, The Century Foundation, a left-leaning think tank, found that nearly 99 percent of student fraud complaints reported to the U.S. Department of Education involved for-profit schools. Under the borrower defense-to-repayment process instituted by the Obama administration, students can apply to have their federal loans forgiven if they feel that they were misled by fraudulent colleges.
In July, Delaware Attorney General Matt Denn was among 19 attorney generals to sue Education Secretary Betsy DeVos for suspending the federal gainful employment rule. Under the rule, the government canwithhold federal student aid from vocational programs that leave graduates miredindebt that they can't realistically repay.
Consumer advocacy groups have criticizedDeVos and the Trump administration for hiring for-profit industry veterans and dismantling rules that were meant to protect students from abuse by for-profit colleges. Before he took office, Trump agreed to pay $25 million to settle fraud allegations at the now-closed, unaccredited Trump University.
Reached this week, a spokesman for the U.S. Department of Veterans Affairs said the department encourages student veterans to bearmed with information when applying to college. But they also need to pick "the institution that best meets their specific needs, regardless of whether the school is non-profit, for-profit or a state institution." WalterOchinko, research director for Veterans Education Success, saidmany veterans rely on word-of-mouth to decide where to apply and are impressed by the convenience offered by for-profit institutions, such as same-day enrollment and distance-learning.
While working as a fellow at Carper's office, Ochinko met a Pennsylvania veteran who had exhausted his GI bill benefits while attending a for-profit college in Colorado. The vet left school without a bachelor's degree but with $60,000 in loan debt.
Ochinko worries that similar complaintsgounreported becauseveterans are too embarrassed to come forward.
"The military are taught to be self-reliant, to suck it up," he said.
Contact Margie Fishman at 302-324-2882, on Twitter @MargieTrende or mfishman@delawareonline.com.
