“We’ve got to make sure you’ve got every tool you need to make an informed decision when it comes to picking a school…. Right now, it’s not that easy…. You go online to try and find the best school for military members…. You end up on a website that looks official. They ask you for your email, they ask you for your phone number. They promise to link you up with a program that fits your goals. Almost immediately after you’ve typed in all that information, your phone starts ringing…. But, as some of your comrades have discovered, sometimes you’re dealing with folks who aren’t interested in helping you. They’re not interested in helping you find the best program. They are interested in getting the money. They don’t care about you; they care about the cash.
So they harass you into making a quick decision with all those calls and emails…. I’m not talking about all schools…. But there are some bad actors out there. 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. It’s not right. They’re trying to swindle and hoodwink you.” – President Barack Obama, April 27, 2012, signing Executive Order 13607
What President Obama described in 2012 remains all too real. It is a problem that has been documented by: two undercover U.S. Government Accountability Office investigations; a two-year U.S. Senate Committee investigation; hearings by multiple Congressional Committees; CBS News; 60 Minutes; PBS Frontline; ABC News; the New York Times; The Wall Street Journal, and multiple other media outlets. More than 50 newspapers across the country have written editorials to express their concern about problem, including USA Today and six editorials by the New York Times, alone.
The G.I. Bill is America’s chief “thanks” to those who have given the most to their country; it is a ticket to the American Dream for most veterans – a chance to earn a college degree and the skills needed for the civilian workforce and a better future for themselves and their families.
But veterans coming home from Iraq and Afghanistan are being targeted by very aggressive and deceptive sales pitches for low-quality, high-cost, for-profit colleges that have a financial incentive – because of an unfortunate loophole in federal law – to deceive veterans in order to get access to their G.I. Bill dollars.
The 90/10 Loophole: Federal law forbids for-profit colleges from receiving more than 90 percent of their revenues from federal education aid, but the G.I. Bill was largely dormant at the time the law was enacted (prior to the establishment of the post-9/11 G.I. Bill), and neither the G.I. Bill, nor Defense Department tuition assistance, are specifically named in the list of federal education aid. This loophole allows for-profit colleges to count the G.I. Bill and military tuition assistance as private, non-federal dollars to help them avoid a 90% cap they otherwise face on federal aid. (Twenty-two state Attorneys General wrote Congress that this practice was a violation of the intent of the federal cap.)
Because of this 90/10 loophole, for-profit colleges are eager to enroll students using the G.I. Bill and Defense Department tuition assistance – so eager that some companies engage in deceptive and aggressive marketing to sign up veterans and service members.
As Holly Petraeus, the head of Service Member Affairs at the Consumer Financial Protection Bureau, has explained: “For every service member or veteran (or spouse or child, in the case of the post-9/11 G.I. Bill) enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but Title IV money. This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in.”
Internal corporate e-mails obtained by the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP) during its two-year investigation show executives at the largest for-profit colleges actively discussing their “military strategy” and need to “accelerate military billings/collections” to keep under the 90 percent cap on federal funds, and to launch special veterans programs because “we’re all in agreement that we should do this for 90/10.”
A veteran and staffer at VFW tested the system. He told National Public Radio, “Within three to four days, I got in excess of 70 phone calls and I got well over 300 emails” from for-profit colleges.
For-profit college salesmen continue to recruit on military bases and VA hospitals. As Business Week reported, Ashford University even signed up a Marine with traumatic brain injury convalescing in a military hospital. “U.S. Marine Corporal James Long knows he’s enrolled at Ashford University. He just can’t remember what course he’s taking.”
The U.S. Government Accountability Office ran two undercover investigations, sending undercover agents to pose as students. Every single one of 15 large for- profit colleges deceived federal undercover officers about the quality of education, cost, and likely job and salary for graduates.vi Four colleges engaged in actual illegal fraud (such as directing students to falsify federal student loan applications). The undercover officers then registered as students at those colleges, and found the “education” of such low quality that students were encouraged to cheat and received top grades for submitting photos of celebrities in lieu of a required essay.
In a two-year investigation, the U.S. Senate HELP Committee found rampant deception by for-profit colleges about every aspect of the education they offer – the true tuition, the quality, the teachers, the classrooms, the lessons, the accreditation, the eligibility for licensing or jobs, the ability to transfer credits to nearby public colleges, the graduation rate, the job placement rate, career assistance, and even signing students up for high-interest private loans without their knowledge or failing to disclose the true terms of loans.
Some for-profit colleges even promise veterans a career in fields that require a license – such as law, plumbing, electricity, and medical fields – but veterans find out after graduation their college is not recognized or properly accredited and graduates are not eligible to obtain licenses required for the career. For example:
At the same time, some schools market that their degree is needed for a job, when it is not. The Senate HELP Committee received many complaints from individuals who were told by a for-profit school that they needed its degree, only to find upon graduation that the job they were trained for could be had with a simple high school degree or GED. Similarly, the Center for American Progress released a report detailing how for-profit colleges sell their degrees as necessary for health jobs, when those degrees are not needed (such as for medical billing) or provide insufficient training to obtain the job.
Federal and state law enforcement – prodded and assisted by Veterans Education Success – are starting to take action. The U.S. Federal Trade Commission recently opened an investigation into deceptive marketing and recruiting by DeVry; the U.S. Consumer Financial Protection Bureau has launched a lawsuit against ITT Technical Institute and Corinthian Colleges; the U.S. Department of Justice has one open suit against EDMC and is investigating additional suits against other companies; the U.S. Department of Education is shuttering Corinthian Colleges for fabricating job placements; the U.S. Securities & Exchange Commission is investigating several for- profit school chains; and nearly three dozen state Attorneys General are investigating and bringing suits against half a dozen of the for-profit companies that conduct deceptive recruiting.
None of these federal or state law enforcement actions would be occurring today without the advocacy, and support in gathering witnesses and building legal cases, by Veterans Education Success and its close allies.
Education salesmen turned whistleblowers have explained what’s going on inside the massive call centers where for-profit college salesmen are under constant pressure to sign up veterans:
Listeners can hear for themselves how aggressive and deceptive the recruiting phone calls are. PBS Frontline reporters recorded the calls, as part of research for a documentaryxx about veterans tricked by Art Institutes and other predatory for- profit colleges.
Internal recruiting documents of predatory for-profit colleges – made public during the two-year investigation by the U.S. Senate HELP Committee – reveal that many for-profit colleges engage in pain-based recruiting.xxii Salesmen are specifically taught to emotionally manipulate vets into signing up, because, as their internal corporate documents acknowledge, students are unlikely to make a “rational” decision to attend for-profit colleges, given that community colleges and public universities offer lower cost, higher quality, accredited degrees.
Here is what it is like from the point of view of a veteran:
Marine Specialist Bryan Babcock: “I specifically asked ITT Tech before signing up whether their degree was the same as any other public 4-year university and was told YES. I found out while applying at NYPD, LAPD, Seattle PD and 23 other police departments that NONE of them accepted ITT Tech credits. Once I found out that my time and money spent at ITT Tech was worthless, I tried to transfer my credits to a community college. I was told I have to start completely over as a freshman.”
Marine Corporal Anselm Caddell: “When I attempted to transfer my units from Brown Mackie to Pasadena City College in California, I found out that none of my units transferred because they didn’t have the right level of accreditation. Not only did Brown Mackie lie about their accreditation level but they lied about (the) level of education they offer… I have a debt with nothing to show for it and am struggling to stay afloat.”
Air National Guard Corporal Chad Putnam: “I was told that the Art Institute had a 93% job placement rating and since the school had campuses all over the U.S., that I would have access to a nationwide network of employers… It wasn’t until near the end of my schooling that I began to realize that a lot of the training I was getting was outdated, in some instances by a few years, and that I had a long way to go until I was up to par with the industry standards. I also found out that… my program had a success rate of only 38%. I have student loans that I am going to be paying off for years and really I have nothing to show for it.”
Marine Corporal Thomas Dickson: “I entered my information in a search engine for military friendly schools. I received a phone call from Colorado Technical University. After speaking with the admissions rep, I told him I wanted to explore all my options. That same admissions representative called me everyday until I submitted my application to the school. After my application was accepted, I received an email instructing me how to apply for a loan with the exact amount I needed to request. I was told that this loan was the only way I could attend classes. [Months later, when] I learned I was going to be deployed and would have no phone and no internet access, I contacted my advisor and was told I could put my classes on hold and finish them when I returned. I was instructed to email my professors to alert them of my situation and my advisor would take care of the rest. When I returned from the field-op, I learned that I failed my classes and was signed up for another session, which I was currently failing. Obviously, my classes were not put on hold nor was I withdrawn for a military leave of absence. I called my advisor, [who] informed me that I could not withdraw from classes because it was school policy to not allow withdrawals during the first year of attendance.”
A military student who wrote to the U.S. Senate HELP Committee: “I believe that the University of Phoenix is using deceptive practices in order to lure students into the school[. T]he enrollment counselors tell students that they should be complete with their course of studies in a short period of time fully knowing how long it is going to take. . . . I have talked with other students at the University of Phoenix and this appears to be a common tactic used by University of Phoenix enrollment counselors.”
Another military student shared with the Senate HELP Committee the letter he wrote to the University of Phoenix, which is billing him for classes he never took: “As a marine of 19 years, I’ve served in Desert Storm, Somalia, and Operation Iraqi Freedom x2. You cannot imagine the emotional battle this has taken on me after dealing with this for nearly TWO years!! An education institution such as yours earns millions of dollars each year, and yet you punish those who are willing to risk their lives and fight for your freedoms, you should be ashamed.”
Marine Jonathan Ngowaki, was signed up by DeVry for a $15,000 loan without his knowledge and against his explicit instruction that he wanted no loans. He believes the school misrepresented the forms he signed when enrolling: “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. It’s all about the money. It’s all a money game. It really bothers me.”
“All they hear from these schools is, ‘This won’t cost you a thing,’” explained Robert L. Songer, a retired Marine colonel who is the lead education adviser at Camp Lejeune in North Carolina.xxv Songer said for-profit colleges hound Marines at Camp Lejeune to enroll in classes of limited educational value and even sign them up for high-interest-rate loans. He cited numerous complaints he received from Marines.
What Federal Policymakers Say:
Federal policymakers are well aware of the problem:
President Obama President explained at Fort Stewart in Georgia, as he signed Executive Order 13607xxx to combat the scam: “There are some bad actors out there. 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. They’re trying to swindle and hoodwink you. They don’t care about you; they care about the cash. It’s not right.”
Examples of Recent Law Enforcement Action
Legal action can make an enormous difference in recouping losses for existing students and providing a deterrent effect on the industry from its most egregious deceptive recruiting practices. Recently:
Findings of the U.S. Senate HELP Committee
At the conclusion of its two-year investigation, the U.S. Senate HELP Committee released a 2,000-page report. Some of the findings:
Four years after the Post-9/11 GI Bill was implemented, enrollment of veterans in for-profit colleges has again increased sharply, in tandem with a steep decline in the share of veterans’ enrolling in public institutions, even though overall student enrollment in for-profit colleges has declined.
Taxpayers continue to pay twice as much on average to send a veteran to a for-profit college for a year compared to the cost at a public college or university ($7,972 versus $3,914).
The federal government does not currently track how veterans are performing at different types of colleges. However, overall student outcomes provided by the companies to the HELP Committee for students enrolling between 2008 and 2009 give ample reason for concern. At the for-profit colleges currently receiving the most benefits, up to 66 percent of students withdrew without a degree or diploma.