New Scholarship Helps Student-Veterans Who Say For-Profit Colleges Victimized Them

A nonprofit foundation has established a scholarship program with an unusually narrow purpose: helping student-veterans who say they were defrauded or misled by for-profit colleges.

The Veterans’ Student Loan Relief Fund, a project of the Kisco Foundation, is currently accepting applications for its second round of awards. The fund provides grants of up to $5,000 to student-veterans who used their military educational benefits to attend a for-profit college and are now experiencing financial hardship as a result.

The Kisco Foundation is a philanthropic endeavor of Jerome Kohlberg Jr., a retired Wall Street businessman and billionaire who attended college on the original GI Bill after returning from military service in World War II.

In order to qualify for the scholarship, a student-veteran must owe student-loan debt, have exhausted all of his or her military educational benefits, and have been misled or defrauded by a for-profit college, according to Matthew C. Boulay who directs the program.

Mr. Boulay says the fund, which is administered through Scholarship America, is intended to provide relief to veterans “who are otherwise financially responsible but have found themselves over the last few years spending their GI Bill benefits on a college education that ended up being both worthless and causing a lot of debt.”

Having been “defrauded or misled” by a for-profit college is a requirement for receiving a grant, Mr. Boulay says, but he concedes that proving fraud or deception is not always clear-cut. The program relies on an applicant’s personal essay as well as supporting financial documents to make its decisions, he says. The recipients’ experiences at for-profit colleges do not necessarily rise to the legal standard of fraud (though Mr. Boulay has referred several veterans to a lawyer), but all were somehow misled, he says.

For example, he says, many veterans discovered that their credits from a for-profit college did not transfer to another institution or that their degree did not lead to the type or level of employment that the college promised.

The issue of allegedly predatory practices by for-profit institutions has increasingly caught the attention of advocates for veterans, lawmakers, and a coalition of state attorneys general.

Some argue that the federal “90/10 rule”—which does not count veterans’ benefits toward the 90-percent cap on the amount of annual revenue a for-profit college may receive from federal student-aid programs—creates an incentive for the institutions to aggressively pursue veterans for their education benefits. Several proposals to change that law are floating in Congress, and President Obama signed an executive order this year aimed at curbing colleges’ predatory practices toward veterans.

Proponents of for-profit education have strongly rejected broad-based criticisms of the sector. They have argued that any problems or predatory practices, to the extent they exist, are not systematic or representative of the entire sector. Still, earlier this month, the Association of Private Sector Colleges and Universities, the main trade association of for-profit colleges, formed a blue-ribbon task force with the goal of creating recommendations and a set of best practices for improving the quality of veterans’ education at its member institutions.

Aside from providing direct financial assistance to veterans in need, the scholarship program is working to pressure policy makers to do more to combat what it describes as the predatory practices of some institutions and to warn other student-veterans.

“It is frankly very hard for folks in the military culture to stand up and say, ‘I got sold a bill of goods,’” says Mr. Boulay, who served as a Marine in Iraq in 2003. “We’re trying to break down some of the barriers about talking about this so other veterans can hear the stories and be more cautious.”

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