Government agencies scrutinize companies for saddling students with significant debt and inadequate degrees
By Gregory Karp, Chicago Tribune reporter
7:00 PM CST, January 22, 2012
Sen. Dick Durbin, D.-Ill., is scheduled to hold a forum on the issue in Chicago Monday and plans to introduce legislation later in the day that would eliminate the financial incentive for-profit colleges have to recruit veterans aggressively into pricey programs. It would also require schools to get more of their revenue from sources other than the federal government's educational aid programs.
Criticism of for-profit schools has heated up in recent weeks. Last week, Illinois Attorney General Lisa Madigan sued Westwood College, claiming for-profit colleges mislead students enrolled in its criminal justice program, putting them deep in debt and saddling them with a nearly worthless degree for pursuing careers in Illinois law enforcement.
Earlier this month, shareholders sued Career Education Corp., a large for-profit college operator based in Schaumburg, claiming company officials misled investors about job placement rates for graduates, which led to a scandal and contributed to a lower stock price.
For-profit colleges are being scrutinized by Congress, the U.S. Department of Educationand the Justice Department for saddling students with crushing debt and questionable degrees that don't lead to jobs in their fields of study. Much of their revenue comes from federal grants and loans.
Military veterans are being aggressively recruited, critics claim, because of their lucrative forms of federal aid, such as GI Bill funds and Department of Defense tuition assistance benefits. That aid doesn't count toward the 90-10 rule, which bars for-profit colleges and universities from deriving more than 90 percent of their revenue from the Department of Education's federal student aid programs. The purpose of the rule is to ensure that for-profit schools, many of which are publicly held corporations, are not using taxpayer money as their sole source of revenue.
A Dec. 8 Senate committee report noted that educational benefits from the Veteran's Administration and the Department of Defense received by 20 for-profit education companies between 2006 and 2010 increased 683 percent, to more than a half-billion dollars.
Durbin will propose changing the rule to 85-15, meaning for-profit colleges would be limited to receiving 85 percent of their revenue from federal financial aid. Significantly, it would also count education aid for military personnel toward that 85 percent, eliminating the special incentive for career schools to recruit veterans.
Brian Moran, interim president of the Washington-based Association of Private Sector Colleges and Universities, which represents for-profits colleges, said in a statement that some legislators "have chosen to erect, rather than break down, the barriers to critical job-training and educational programs for veterans. Sen. Durbin's reported legislation on recruiting will only cut off access for thousands of veterans to the skill-intensive, hands-on programming and intensive job-placement support that veterans transitioning into the workplace need."
Those at American Military University, a provider of online education to active members of the military, contend schools like theirs are wrongfully lumped with schools using questionable tactics.
"No matter how well we're doing and how long we've been honorably serving the military, we get caught up in this because of the broad-brush strokes with this attack on the for-profit industry," said Jim Sweizer, vice president of military programs at American Military University, based in Charles Town, W.Va.
He added: "It's somewhat insulting that they don't give veterans the benefit of the doubt — these are intelligent people — and (they portray them as) being totally duped by a school."