Senate Democrats Call to End 90/10 “Loophole” Allowing For-Profit Schools to Target Veterans
Posted By Derek Johnson on June 23, 2016 at 2:08 pm
Senate Democrats are again pushing for a new legislation to close what they describe as a “dangerous loophole” that allows for-profit colleges to target and prey on military veterans.
Flanked by representatives from various military advocacy organizations, Senators Tom Carper (D-DE) and Richard Blumenthal (D-CT) held a press conference yesterday outside the Senate Swamp to once again call for a vote on the Military Veterans and Education Protection Act. The bill seeks to augment the “90/10 rule,” which mandates that for-profit colleges draw no more than 90 percent of their revenues from Title IV federal student aid.
Many for-profit schools have responded by targeting and marketing to military veterans because the education aid dollars they receive through the GI Bill do not count towards the 90 percent threshold, something Carper said “clearly evades the intent of Congress.”
“I don’t believe that [for-profit universities] are all bad actors. Some are very good actors, but too many of them fall short of the mark,” said Carper, who cited the numerous state and federal investigations for fraud and deceptive marketing practices that have engulfed the for-profit college sector in the past 10 years.
Blumenthal called the loophole “an insult to veterans and taxpayers” and said many for-profit schools are intentionally exploiting members of the military for profits, in some cases lying about the degrees they offer and sucking dry the limited financial aid that veterans receive in exchange for their service.
“To put it really bluntly, so many veterans have become targets of opportunity. Marks for the con artists and scammers who misuse them and taxpayer money, and that’s why we need to close this loophole,” said Blumenthal.
Carper and co-sponsors Blumenthal and Senator Dick Durbin (D-IL) first introduced the legislation last year, but it never made it out of committee. This year, the bill has 30 co-sponsors, all Democrats. Blumenthal said he was at a loss to explain why the bill did not have any Republican co-sponsors.
“The reason is a mystery. I don’t know the reason [why] but I am going to be going over the floor of the United States Senate…and seeking out some of my colleagues,” said Blumenthal.
For-profits actively targeting veterans and military families
For-profit schools have long been under fire from lawmakers and higher education watchdog groups for aggressive and, at times, deceptive marketing practices towards veterans. This practice has become more prevalent since the post 9/11 GI Bill gave returning members of the military access to higher amounts of federal education aid dollars. In 2011, Tom Harkin, former Iowa Democratic Senator gave a speech on the Senate floor about the results of a report by the Senate Committee on Health, Education, Labor and Pensions detailing how for-profit schools were changing their marketing and sales practices in response to the new GI Bill benefits.
“With their eyes on their 90/10 ratio, for-profit schools have moved aggressively to exploit the business opportunity. They have created marketing plans and a sales force specifically designed to target and enroll as many veterans, service members and family members as possible,” said Harkin.
“All too often, students at for-profit schools encounter a high-cost, low-value education, a lack of appropriate support services, and executives whose day-to-day priority is squeezing every available dollar from students and taxpayers. It is all the more alarming that active-duty military personnel and veterans, using their hard earned benefits, are often victims of these for-profit schools,” Harkin said.
The Senate investigation found numerous statements and quotes from CEOs and other high-ranking for-profit school officials on how to take advantage of the new law. For example, in 2010, a memo to the CEO of EDMC, which operates four for-profit universities (Argosy University, The Art Institutes, Brown Mackie College and South University) advised that “[p]robably one of the most important potential short and long-term targets for EDMC are the 800,000-plus military spouses.” The memo continued by recommending that “[a]n aggressive effort to reach these spouses at the military bases with various career fairs, direct communications, and visibility with the Office of Military Families in Washington would be very important.”
In 2015, EDMC settled a $95 million lawsuit for illegally paying recruiters to enroll as many students as possible, and in 2016, the company announced it was planning to shut down Brown Mackie College.
Loophole creates incentive for predatory schools to target veterans
The targeting of military personnel is worrisome because students at for-profit colleges typically graduate at lower rates, incur more student debt and have worse job placement outcomes than students at public and private universities.
At the Senate Swamp press conference, representatives from organizations like the Iraq and Afghanistan Veterans of America, Student Veterans of America and Veterans Education Success lined up to speak and throw their support behind Carper’s legislation. Derek Fronabarger, director of policy for Student Veterans of America said that veterans were particularly vulnerable to deceptive marketing practices because they often don’t have a family history of going to college and lack the support network to separate the good schools from the bad.
“We know that these predatory schools are not the best schools for veterans. Many times veterans are lied to, cheated and ultimately end up with a degree worth less than the paper it’s printed on,” said Fronabarger. “What we see is that good schools spend more on educating their students than on marketing their programs.”
Senate Democrats seeking Republican buy-in to close 90/10 loophole
Carper’s office confirmed that the bill has no Republican co-sponsors. In 2013, former Republican Senator Tom Coburn (R-OK) called the 90/10 rule “arbitrary” and “government engineering at its worst.”
“If 90/10 is sound policy, why not apply this rule to all schools regardless of control type? After all, graduation rates at many nonprofit schools around the country leave much to be desired,” said Coburn. “The truth is, the 90/10 Rule is the government picking winners and losers among colleges that have already proven themselves by being accredited, approved by State-approving agencies, eligible for Title IV, and by complying with a myriad forms of compliance and levels of compliance.”
GoodCall has reached out to Republican Senators John McCain, Rand Paul, Michael Enzi, Rob Portman, Tom Cotton, Ron Johnson, Mark Kirk and Kelly Ayotte for comment and will provide updates for any responses. McCain, Paul, Enzi, Portman, Johnson and Ayotte serve on the Senate Committee on Homeland Security and Governmental Affairs. Cotton serves on the Armed Services Committee, while Kirk sits on the Health, Education, Labor and Pensions Committee.