Student aid loophole has for-profit colleges targeting veterans

A loophole in federal law has made veterans the target of intense–and sometimes exploitative–recruitment efforts by for-profit colleges, officials and advocates said during a July 23 Senate hearing.

For-profit colleges can receive a maximum of 90 percent of their revenue from federal student aid, but technically that limit only applies to funds administered by the Education Department. Other funds, such as military and veterans benefits, can make up the other 10 percent.

Colleges that can’t recruit enough students without federal aid may turn to veterans to ensure that Education Department funds comprise less than 90 percent of their revenue.

“Every veteran that a for-profit school recruits is worth nine more students using federal financial aid,” Tom Tarantino, chief policy officer for Iraq and Afghanistan Veterans of America, told the Senate Homeland Security and Governmental Affairs Committee.

Holly Petraeus, who heads the Office of Servicemember Affairs at the Consumer Financial Protection Bureau, said that “this has given some for-profit colleges an incentive to see servicemembers as nothing more than dollar signs in uniform.”

She recounted a few examples of unscrupulous practices, including the recruitment of veterans whose mental health issues made them vulnerable to aggressive tactics and a military spouse who was given the false impression that the college where she ended up enrolling was “military-affiliated.”

In December, the Veterans Affairs Department registered the term “GI Bill” as a trademark in order to prevent deceptive marketing and recruitment.

Sen. Tom Carper (D-Del.), the committee chairman, said the problems with the loophole go beyond recruitment techniques.

“The idea that any college or university–I don’t care if they’re private, public, for-profit–that gets 100 percent of its revenues from the federal government for me is troubling,” he said.

Steven Gunderson, the CEO of the Association of Private Sector Colleges and Universities, cautioned that if the loophole is eliminated, for-profit colleges will have to enroll students who can attend without federal aid at the expense of low-income students.

For more:
– go to the hearing webpage (webcast and prepared testimonies available)

Related Articles:
CFPB: Military servicemembers struggling to get student loan benefits
Obama administration should address veteran needs, says CNAS
VA should improve oversight of independent living benefits, says GAO

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