For-profit schools challenged on recruiting of veterans
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WASHINGTON -- A wide-ranging examination of for-profit colleges by the U.S. Senate has homed in on how the schools recruit and educate veterans -- a lucrative source of federal funds for Downtown-based Education Management Corp.
From August 2009 to July 2010, EDMC -- which runs the Art Institutes, Argosy University, South University and Brown Mackie College -- took in about $60.5 million from the Department of Defense and Department of Veterans Affairs. According to data compiled by the Senate Health, Education, Labor and Pensions Committee, EDMC was the third largest recipient of such funds in that span, behind Apollo Group Inc. -- which runs the University of Phoenix -- and ITT Technical Institute.
The HELP Committee, led by Sen. Tom Harkin, D-Iowa, has been holding hearings on the practices of for-profit schools -- exposing aggressive and sometimes fraudulent recruiting tactics, and the high debt loads and failure rates of their students.
The for-profit industry argues that it has been unfairly maligned with a focus on a few bad apples and that the colleges fill an important niche for non-traditional and low-income students.
With a Dec. 8 report and a hearing likely in the coming weeks when Congress reconvenes, Mr. Harkin has turned his attention to the explosion in federal funds flowing to these schools to educate veterans. The spark was the 2008 passage of the Post-9/11 GI Bill, which gives most service members who served since Sept. 11, 2001, up to 36 months of tuition payments -- and help for their spouses as well.
The GI Bill funding is even more enticing to schools because it doesn't count against the Department of Education requirement that schools receive no more than 90 percent of their funding from federal grants or loans.
As a result, military money going to for-profit schools spiked dramatically. At EDMC, funding from the Department of Defense and Veterans Administration climbed from $2.04 million in fiscal 2009 to $52.4 million in fiscal 2010, according to data compiled by the HELP committee. Including the GI Bill money, 86.2 percent of EDMC's revenue comes from federal sources.
"We, in good faith, passed legislation to make it easier for present GIs and their families to get educational benefits, and now what we're finding out is for-profit schools are seeing this as a new source of profits for them," Mr. Harkin said in an interview. "And so they've gone after them and using the same kind of deceptive advertising and high-pressure tactics that they're using in other places."
First Published December 27, 2010 12:00 am
