Preying Upon Veterans: A For-Profit Scam

Michael Lux Best Of, Blog, For-Profit Schools, News, Student Loans, Veterans 12 Comments

Memorial Day weekend seems like a fitting time to shed some light on a disgusting trend.  For-Profit schools have been targeting Veterans for their GI Bill benefits, charging them 4x what a not-for-profit university would, and often they don’t leave with a degree or get any meaningful help finding work.

The For-Profit Problem

The issues with For-Profit schools are beginning to come to light.  One whistle blower, a former admissions supervisor with the number two for-profit school corporation, filed a lawsuit alleging that the school’s employment statistics were lies.  A recent government study shows that these schools charge up to four times more than at comparable community college or state university charges for the same education.  Worse yet, graduation rates are significantly lower at for-profit schools than at comparable community colleges and state schools.  Well over half of all students who start a degree program at a for-profit university will not leave with a degree (54% of Bachelors degree students and 63% of Associates degree students do not graduate).

Recruiting at For-Profit universities is a huge component of their operation.  For every job or career counselor, these schools typically hire ten recruiters. Visit the website of many For-Profit schools and compare the effort put into recruiting new students to the effort put into helping current students.  Billions of dollars of Student Aid, in the form of grants and loans go to For-Profit Universities.  To combat the issues with these schools, the government crafted what is known as the 90/10 rule.  In short, this rule requires For-Profit schools to generate at least 10% of their revenue from sources other than Title IV student aid.  However, GI Bill funds are not included in Title IV funds and count towards the schools 10% outside source quota.

“Dollar Signs In Uniform”

Due to the huge financial incentives for the For-Profit school, much of their recruiting focus is placed on Veterans.  Recruiters have been known to actively recruit at Wounded Warriors centers and at veterans hospitals, where they can corner bedridden GIs and entice them with promises of free education and more.”  The recruiters engage in high pressure sales techniques and encourage Veterans to sign up for the school on the spot.  In the industry, they are often referred to as, “Dollar Signs In Uniform.

Sadly, more than two-thirds of the veterans at the For-Profit schools do not graduate.  They are often left with credits that do not transfer to other schools, heavy student loan debt, and they no longer have any GI Benefits remaining.  Worse yet, they are left without a job.

Addressing the Issue

The men and women who bravely serve this country are often among the last to complain.  In order to address this issue two things need to happen.  First, Americans need to spread the word, if you know a Veteran evaluating their options after deployment do them a favor and share some information on this problem.  Secondly, Congress must act to change the law so that there is no longer a huge financial incentive to prey upon Veterans.

Finally, if you are a Veteran or know a Veteran who has been affected by these devious and despicable practices, there is help available.  Thanks to a partnership between the Iraq and Afghanistan Veterans of America, Scholarship America and The Kisco Foundation, Veterans are able to apply for up to $5,000 in loan relief from the Veterans’ Student Loan Relief Fund.  Details and an application can be found at http://iava.org/loan-relief.  Note: the deadline to apply for these funds is August 31, 2013.

Happy Memorial Day Everyone!