Senate Committee's Report Focuses on For-Profit Colleges' Share of Military Education Benefits

February 23, 2012

Although for-profit colleges received more than half of the $563-million in Department of Defense tuition assistance paid to active-duty service members in the 2011 fiscal year, "it is unclear whether the revenues translate into meaningful educational benefits for military students," says a report released Thursday by the education committee of the U.S. Senate.

The report takes particular aim at for-profit institutions that promote themselves as "military friendly" but put relatively large proportions of their revenue toward marketing, student recruiting, and their own profits, and relatively small proportions toward instruction.

Notably, the report singles out Bridgepoint Education's Ashford University, which is based in Iowa. Iowa is the home state of Sen. Tom Harkin, the Democrat who chairs the Health, Education, Labor, and Pensions Committee.

Bridgepoint, the third-largest recipient of military students' tuition-assistance funds, spends 60 percent of its revenues on marketing and profit combined, the report says. On a per-student basis, that works out to $2,714 for recruitment, $1,522 for profit, and just $700 for education. A news release accompanying the report says an analysis of Bridgepoint's spending by the committee's majority staff found that Bridgepoint employs 1,700 recruiters but just one job-placement counselor, "while numerous students log complaints about the lack of support services."

In a written statement, Bridgepoint officials did not address the report's specific criticisms but said the company "remains fully committed to supporting all opportunities for members of the military and their families to earn a college education and to seek the bright future that education offers."

Including Bridgepoint, the report said six of the top-10 recipients of tuition-assistance money were for-profit college companies—American Public Education, TUI Learning (the parent of Trident University), Apollo Group (the parent of University of Phoenix), and Columbia Southern and Grantham Universities. Together the six accounted for 41 percent of all tuition-assistance spending.

The colleges say they deserve credit, not criticism, for providing enrollment approaches and programs that attract military students and veterans.

The committee said its prior analyses of four of the for-profit companies—American Public, Bridgepoint, TUI, and Apollo—had found a collective dropout rate of 60 percent after one year. (That finding was based on data from students, many from the giant University of Phoenix, who enrolled between July 2008 and June 2009, but were not enrolled a year later.)

The report also noted that 60 percent of the educational benefits available through the smaller Military Spouse Career Advancement Accounts program went to for-profit colleges.

The report comes as consumer advocates are paying increasing attention to the way colleges market to service members and veterans. It also plays into efforts by Senator Harkin and other members of Congress who have introduced bills to change a rule that may encourage colleges to recruit active-duty military students and veterans. Under the rule, benefits such students use to pay for college help the colleges avoid violating a federal requirement known as the "90/10 rule."