For-Profit Colleges Still Cash In on Post-9/11 GI Bill, Harkin Report Says

July 30, 2014

Eight big for-profit-college companies received nearly a quarter of all the money spent on Post-9/11 GI Bill benefits in 2012-13, says a report released on Wednesday by Sen. Tom Harkin and the Senate education committee's Democratic majority. And even as the for-profit colleges’ overall enrollments fell from 2009 to 2013, the document asserts, their enrollments of veterans "dramatically increased."

Since the start of the benefits program, in 2009, the proportion of veterans enrolling in for-profit colleges climbed from 23 percent to 30 percent, while the proportion at public colleges dropped from 62 percent to 50 percent, the report says. The average cost of educating veterans at for-profit institutions is twice the price of educating them at public colleges, the report asserts. The $1.7-billion in Post-9/11 GI Bill benefits that the eight companies received in 2012-13 was almost as much as the total cost of the program in 2009-10.

The top recipient was the Apollo Education Group, parent company of the University of Phoenix, which received $272-million in Post-9/11 GI Bill benefits in 2012-13, more than triple the $77-million it received in 2009-10. The Education Management Corporation was second with $163-million in 2012-13, and ITT Educational Services, with $161-million, was third. The other companies, in order of the value of benefits received, were the DeVry Education Group, the Career Education Corporation, Corinthian Colleges Inc., Strayer Education, and Universal Technical Institute Inc.

Of the top 10 recipients of Post-9/11 GI Bill funds, the University of Maryland system was the only public institution; Embry-Riddle Aeronautical University was the only private, nonprofit institution.

The report says that the companies appear to be "increasingly dependent" on veterans because the Post-9/11 bill's benefits help colleges comply with regulations forbidding them to receive more than 90 percent of their revenue from federal grants and loans. Federal military benefits don’t count toward that 90 percent, although several lawmakers have proposed legislation to change that.

On average, the eight for-profit companies saw a 154-percent increase in the enrollment of veterans from the 2009-10 academic year to 2012-13. Corinthian, which recently announced that it would sell or gradually close all of its campuses, received $186-million from 2009 to 2013.

Senator Harkin, Democrat of Iowa and chairman of the education committee, released the report on the two-year anniversary of the committee’s voluminous and damning critique of the for-profit-college sector. The 2012 report detailed concerns over aggressive marketing by for-profit colleges and the high rates of students who left without degrees.

In the new report, Mr. Harkin notes that some of the institutions, notably Phoenix, Kaplan University (owned by the Graham Holdings Company), and Ashford University (owned by Bridgepoint Education Inc.), have since put programs in place to improve student outcomes. But "none of the other companies receiving the largest amounts of Post-9/11 benefits have made public similar policies, and serious questions remain regarding how many students, including veterans, who enroll in these schools actually complete the programs."

The report also points out that several of the companies that receive the most GI Bill benefits are facing investigations by state and federal agencies, and that at four of them—ITT, Corinthian, Education Management, and Career Education—35 percent to 57 percent of their programs would fail the proposed "gainful employment" rule, which is intended to ensure that students can afford the debt they incur when attending career-focused programs.