ITT Educational Services and Colleges and Universities and Education Finance and Education Business and Education & Workforce Development

For-profit colleges tap GI Bill loophole for business

July 30, 2014

For-profit colleges, including Carmel-based ITT Educational Services Inc., accounted for eight of the top 10 recipients of education benefits for U.S. military veterans in the 2012-13 academic year, according to a U.S. Senate report.

About $1.7 billion of Post-9/11 GI Bill funds went to for-profit schools that year, more than double the $640 million for the 2009-2010 year, according to the report released Wednesday by Sen. Tom Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee.

Over the past four years, the top eight for-profit recipients received $2.9 billion, according to the report. The for-profit college industry is starting to show strains after years of scrutiny from federal and state agencies and the Obama administration over recruitment practices and student borrowing.

“While the Post-9/11 G.I. Bill was designed to expand educational opportunities for our veterans and servicemembers, I fear that it is expanding the coffers of the big corporations running these schools rather than preparing our service members and veterans for post-military employment,” Harkin, a Democrat from Iowa, said in a prepared statement.

The so-called “90/10 rule” limits a for-profit college to getting no more than 90 percent of its revenue from the government. However, veterans’ and military tuition programs are excluded from the cap, and the colleges have aggressively recruited from the military.

The top recipient in 2012-2013 was Apollo Education Group Inc.’s University of Phoenix with $272 million, followed by Pittsburgh-based Education Management Corp. at $163 million and ITT Educational, with $161 million.

Corinthian Colleges Inc., which said this month that it would sell or shut down its 107 campuses after the government limited access to student aid, received $63 million that year, according to the report. Corinthian, based in Santa Ana, Calif., serves about 72,000 students and is facing allegations in multiple states of falsifying job-placement and marketing data.

The University of Maryland system was the largest recipient of Post 9/11 GI Bill funding among public institutions in 2012-2013 with $50 million.

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