Let Protect VETS Act teach for-profit schools a lesson

by Mike Saunders

I’ve seen a lot during my years in the Army and now working in veterans’ organizations for the past decade. I thought I’d seen it all until I ran into a tank commander from my battalion, Staff Sgt. Elliot, speaking at a Senate news conference in 2012 about how he was defrauded by a proprietary school that used a loophole in the law to recruit him. I had no idea he was going to be there. We had not seen each other in over 10 years.

I realized in that moment that if leaders like Staff Sgt. Elliott could be taken advantage of, then anyone could. It could easily happen to the junior soldiers who served under him. Many of those soldiers, and similarly situated airmen, Marines and sailors, come from places in America where very few people have any experience with higher education.

Education is not a typical consumer good. If you buy something that doesn’t work, usually you can return it for a refund. However, you can’t return an education. It’s a one-shot deal: You either do it the right way the first time, or you waste time and money that you are never going to get back.

Tragically, veterans, service members, their family members, and their survivors are specifically targeted for education fraud because of an unintended loophole in federal law. The law caps the percentage of federal funds on which a for-profit school can rely to 90% “to allow,” as the Supreme Court wrote in upholding the rule’s predecessor, “the free market mechanism to operate and weed out those institutions [which] could survive only by the heavy influx of Federal payments.” The other 10% of their funding must come from the private sector.

The 90/10 loophole is a legislative mistake from the early 1990s in which congressional staff failed to list the GI Bill and military tuition aid when they were defining “federal money” when determining the 90% cap. This has unintentionally incentivized proprietary schools to target veterans and active-duty service members for their education benefits as “nothing more than dollar signs in uniform,” as the former head of the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, Holly Petraeus, wrote.

But now there’s hope. For the first time since 1992 we have a chance to close this loophole and stop predatory schools from defrauding veterans like Staff Sgt. Elliott. A bipartisan coalition of senators is now willing to stand up for veterans and close this loophole. It’s evidence that Congress can still work — and work well.

Last month a bipartisan group of Senators, led by Tom Carper, D-Del., Bill Cassidy, R-La., James Lankford, R-Okla., and Jon Tester, D-Mont., introduced the Protect VETS Act to close the loophole. In an important sign of the bill’s chance of success, the chairman of the Senate Health, Education, Labor and Pensions Committee, Lamar Alexander, R-Tenn., also signed on. The Protect VETS Act is a major development that shows bipartisan compromise can still be achieved in Washington.

Now we have the first bipartisan bill to close the 90/10 loophole. It is a testament to the work of a coalition of military and veteran service organizations, along with groups that represent military families and the survivors of the fallen. They have changed the conversation on Capitol Hill from one of partisan defensiveness to one of proactive, pragmatic problem-solving and patriotic protection of our troops and veterans. It’s a common-sense bill that is drawing support from both sides of the aisle. At a time of unprecedented partisan rancor in this country, this is a story that can serve as a model for other issues facing America.

My organization hears all the time from military-connected students who are angry and upset that they wasted their hard-earned VA education benefits on a school that promised them a quality education leading to a good job, but instead delivered only worthless credits and broken dreams. The broken dreams often come with a millstone around their neck in the form of unpayable student loan debt. Fixing the 90/10 loophole is one way to solve that problem.

It is electrifying to see both parties in the Senate working together on a common-sense solution to solve the problem of distorted incentives in higher education that leave military-connected students like Staff Sgt. Elliott the targets of fraud. No veteran deserves to have a target on their back because of their GI Bill.

Mike Saunders is director of military and consumer policy at Veterans Education Success, a 501(c)(3) nonprofit organization.

This op-ed was originally published by Stars & Stripes on December 20, 2019. Read the full op-ed here.