POST-9/11 GI BILL DECISION MEMORANDUM
by
Jason I. Kim
A capstone submitted to Johns Hopkins University in conformity with the requirements
for the degree of Master of Arts in Public Management
Baltimore, Maryland
May 2015
© 2015 Jason I. Kim
All Rights Reserved
Abstract
For-profit colleges are aggressively targeting veterans and their Post-9/11 GI Bill
benefits to maximize profits. At the expense of taxpayers’ dollars, tuition costs are high
and the quality of education is questionable. Publicly traded companies run these forprofit colleges, where the goal of maximizing profits competes with their decision to
invest in education quality. The “90/10 rule” in the Higher Education Act (HEA)
required for-profit colleges to obtain at least 10% of their revenue from sources other
than the government. The current Post-9/11 GI Bill contains a critical loophole in the law
where GI Bill benefits do not count as federal revenue under the rule.
This decision memorandum argues that Congress needs to amend the “90/10 rule”
to count Post-9/11 GI Bill funding as federal funding and to tighten the current “90/10
rule” to “85/15 rule.” These changes will de-incentivize for-profit colleges from
aggressively targeting veterans.
ii
Table of Contents
List of Figures .................................................................................................................. iv
Action-Forcing Event ........................................................................................................1
Statement of the Problem ..................................................................................................2
History Section ...................................................................................................................3
Start/Purpose of the GI Bill ..............................................................................................3
Major Laws and Executive Orders ...................................................................................6
Background Section .........................................................................................................11
Purpose and Policy .........................................................................................................11
Education Quality at For-Profit Colleges .......................................................................14
For-Profit College Business Model and the 90/10 Rule ................................................16
Principal Players .............................................................................................................17
Policy Proposal Section....................................................................................................21
Policy Authorization ......................................................................................................21
Policy Implementation ...................................................................................................22
Policy Analysis..................................................................................................................23
Advantages .....................................................................................................................23
Disadvantages.................................................................................................................28
Political Analysis ..............................................................................................................31
Recommendation..............................................................................................................36
References .........................................................................................................................39
Curriculum Vita ...............................................................................................................46
iii
List of Figures
Figure 1: Comparing Post-9/11 GI Bill benefits from 2009-2010 vs. 2012-2013 of ForProfit Colleges and All Other Colleges ..............................................................................3
Figure 2: Comparison chart of four-year colleges with graduation and loan statistics ..12
Figure 3: Higher Education Act Roles and Responsibilities. ...........................................20
Figure 4: For-Profit College Comparison Infographic .....................................................26
Figure 5: For-Profit Company Lobbying Amounts ..........................................................27
Figure 6: Types of credentials veterans earned at for-profit colleges ..............................30
iv
MEMORANDUM FOR Brad Wenstrup, House Committee on Veterans’ Affairs,
Chairman of the Subcommittee on Economic Opportunity
FROM: Jason Kim, Policy Advisor
SUBJECT: Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill)
DATE: April 25, 2015
Action Forcing Event
A recent report released from the Senate Health, Education, Labor and Pensions
(HELP) Committee showed that for-profit colleges received around $1.7 billion in Post9/11 GI Bill benefits in 2012-2013 alone. Many of these for-profit colleges are currently
under investigation for deceptive and potentially illegal recruiting practice. What’s
concerning is that these universities are receiving a large amount of Post-9/11 GI Bill
funds. 1
With Iraq closed and Afghanistan drawing down, there will be a growing influx of
veterans returning to the workforce. With this in mind, President Obama has been urging
this new generation of veterans to utilize the Post-9/11 GI Bill to pursue education. 2 It is
important to address the concerns raised by federal and state investigations to best assist
veterans’ transition into civilian life. While in a constrained budget environment, it is
important for us to know that the investment in the GI Bill is being maximized.
Additionally, you can ensure that our nation’s veterans are being taken care by the
Veteran’s Administration, while leading the charge in supporting our veterans.
Julianne Hing, “For-Profit Schools Scoop Up Vets’ G.I. Bill Benefits,” Colorlines, July 30,
2014, http://colorlines.com/archives/2014/07/for-profit_schools_scoop_up_vets_gi_bill_benefits.html
(accessed July 31, 2014).
2
Mike Gottschamer, “Obama Urges Newest Vets to Use Post-9/11 GI Bill,” USA Today, June 20,
2014, http://www.usatoday.com/story/news/nation/2014/06/20/obama-urges-newest-vets-to-make-use-ofgi-bill/11173967 (accessed June 22, 2014).
.
1
1
Statement of the Problem
For-profit colleges are aggressively targeting veterans and their Post-9/11 GI Bill
benefits to maximize profits. At the expense of taxpayers’ dollars, tuition costs are high
and the quality of education is questionable. Publicly traded companies run these forprofit colleges, where the goal of maximizing profits competes with their decision to
invest in education quality. Over the past four years, the top eight for-profit colleges
receiving Post-9/11 GI Bill funds have received a total of $2.9 billion to enroll veterans. 3
Seven of the top eight are currently facing investigations from state attorneys or federal
agencies for deceptive or misleading recruiting in addition to other federal violations.
One company, Corinthian Colleges, is currently selling or closing its 90 U.S. campuses
due to Department of Education’s concerns about its operations; the concerns include
falsifying job placement data to use as marketing to prospective student, along with
allegations of altering grades and attendance. 4 In just four years, the amount of veterans
enrolling in for-profit colleges climbed from 23% to 30% of total student enrollment,
while the amount of veterans enrolling at public colleges have dropped from 62% to
50%. This shift in attendance has increased the cost of the GI Bill due to the fact that the
estimated average cost of for-profit colleges is twice the cost of public colleges. 5 As
tuition increases, and more veterans become reliant on the Post-9/11 GI Bill benefits, it is
important that we find a way to address this growing issue.
Goldie Blumenstyk, “For-Profit Colleges Still Cash In On Post-9/11 GI Bill, Harkin Report
Says,” The Chronicle of Higher Education, July 30, 2014, http://chronicle.com/article/For-Profit-CollegesStill-Cash/147977/ (accessed August 4, 2014).
4
Kimberly Hefling, “Controversial For-Profit Colleges Rake in Billions of GI Bill Funds,”
Huffington Post, July 30, 2014, http://www.huffingtonpost.com/2014/07/30/for-profit-colleges-gibill_n_5633369.html (accessed August 3, 2014).
5
Blumenstyk, “For-Profit Colleges Still Cash In On Post-9/11 GI Bill, Hardin Report Says.”
3
2
Figure 1: Comparing Post-9/11 GI Bill benefits from 2009-2010 vs. 2012-2013 of ForProfit Colleges and All Other Colleges. 6
History Section
Start/Purpose of GI Bill
During the Great Depression, there was a fear among the public that poor, jobless,
and disgruntled veterans would cause unrest that would lead to revolt. In 1932, this fear
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” Majority Committee
Staff Report, p. 3, July 30, 2014, http://www.harkin.senate.gov/documents/pdf/53d8f7f69102e.pdf
(accessed August 1, 2014).
6
3
led the military to forcibly remove 20,000 unemployed and homeless veterans and burn
their encampment near the Capitol and White House. 7
These fears returned as World War II came to a close and an estimated 16.1
million working-age males returned from war. The influx of people back into the work
force created the potential for mass unemployment. In anticipation of this situation,
Congress and the American Legion worked together to pass what became the
Serviceman’s Readjustment Act of 1944 (P.L. 78-346) or otherwise known as the original
GI Bill. The act provided resources to construct additional hospitals; educational
assistance to non-disabled veterans; home, business, and farm loans; job counseling and
employment placement services; and an unemployment benefit. Overall, the original GI
Bill was considered a success, as it was able to avert unemployment, raise education
levels, and increase productivity in the United States workforce. Another
accomplishment of the original GI Bill was that it showed that the United States values
those that serve in the military. 8
Throughout the decades, different variations of the GI Bill have come and gone,
however all have centered around two themes: promote development of work-related
skills to gain employment and ensure that the base benefit is equitable regardless of rank.
Although these two themes remained through the multiple variations of the GI Bill, there
has been a lot of debate on the level of educational assistance veterans should receive.
Historically, many citizens saw the GI Bill as a necessary compensation for serving or
reimbursement for voluntary service. Military Services saw the GI Bill as a necessary
Cassandria, Dortch, “GI Bills Enacted Prior to 2008 and Related Veterans’ Educational
Assistance Programs: A Primer,” Congressional Research Service, October 22, 2012, p. 2-3,
http://fas.org/sgp/crs/misc/R42785.pdf (accessed August 1, 2014).
8
Ibid, 3.
7
4
recruiting tool to bring in talent. There were also others that feared that if the education
benefits were too high; this would lead to attrition, as soldiers would be tempted to leave
service. Beginning in 1974, the GI Bill focused on retention and recruitment of high
quality personnel while also providing benefits to those leaving active duty service. This
idea continued on through the years as new GI Bills were introduced. Today, the same
focus of retention and recruitment of high quality personnel is seen with the development
and passing of the Post-9/11 GI Bill. 9
The latest GI Bill to be passed is the Post-9/11 Veterans Educational Assistance
Act of 2008 (Post-9/11 GI Bill), Title V of the Supplemental Appropriations Act, 2008
(P.L. 110-252). The Post-9/11 GI Bill was intended to enhance the benefits of those that
have served on active duty since September 11, 2001. Understanding that there would be
a lot of veterans adjusting back to civilian life, the purpose of the bill was to assist
veterans and their families in their transition. The Post-9/11 GI Bill was designed to meet
four main objectives. The first objective was to provide parity of benefits between active
duty servicemen and reservists. Since active duty and reservists have deployed to support
the wars in Iraq and Afghanistan, there was a desire to ensure equivalent benefits for that
service. The second objective was to provide comprehensive educational benefits to
include tuition payments, book allowance, and monthly stipends to cover living expenses.
Unlike many of its predecessors, the Post-9/11 GI Bill was structured in such a way as to
provide educational and financial benefits so that servicemen could go to school fulltime, while supporting themselves without incurring an absorbent amount of debt. The
third and fourth objective complement one another as the third helped Services meet their
Cassandria Dortch, “GI Bills Enacted Prior to 2008 and Related Veterans’ Educational
Assistance Programs: A Primer,” p. 2-6.
9
5
recruiting goals, while the fourth helped improve military retention by providing ways to
transfer benefits to family members. Underlying these four objectives was the hope that
these new benefits would reduce military recruiting challenges, while simultaneously
decreasing unemployment rates among veterans. 10
Major Laws and Executive Orders
Since the implementation of the program on August 1, 2009, there have been
several issues raised to the programmatic management. Additional laws have been
passed to amend these issues of the Post-9/11 GI Bill.
•
The Supplemental Appropriations Act, 2009 (P.L. 111-32): This was enacted
on June 24, 2009 and it created the Marine Gunnery Sergeant John David Fry
Scholarship.
•
The Post-9/11 Veterans Educational Assistance Improvements Acts of 2010
(Improvements Act; P.L. 111-377): This was enacted on July 4, 2011 and
includes several amendments made to the Post-9/11 GI Bill and other veterans
educational made several amendments to the programs.
•
The Restoring GI Bill Fairness Act of 2011 (P.L. 112-26): This was enacted on
August 3, 2011. It temporarily reserves one amendment of the Improvements Act
for some individuals at private schools in seven states since they would have had
larger out-of-pocket costs in academic year 2011-2012 than in the prior year.
Cassandria Dortch, “The Post-9/11 Veterans Educational Assistance Act, Primer and Issues,”
Congressional Research Service, July 28, 2014, p. 1-2, http://fas.org/sgp/crs/misc/R42755.pdf (accessed
August 1, 2014).
10
6
•
The Honoring America’s Veterans and Caring for Camp Lejeune Families
Act of 2012 (P.L. 112-154): This was enacted on August 6, 2012 and it requires
annual reports on the Post-9/11 GI Bill.
•
Authorization Act for Fiscal Year 2013 (P.L. 112-239): This was enacted on
January 2, 2013 and it expanded eligibility to select members of the Coast Guard
Reserve. 11
•
Veterans Access, Choice, and Accountability Act of 2014 (P.L. 113-146): This
was enacted on August 7, 2014. It requires public colleges to provide in-state
tuition to veterans and eligible dependents if the school is receiving GI Bill
benefits. 12
Of the amendments listed above, the Post-9/11 Veterans Educational Assistance
Improvements Acts of 2010 was the first major amendment to address concerns about
several aspects of the Post-9/11 GI Bill. The issues the 111th Congress sought to revise
were benefit allowances, approved programs of education, participant eligibility, and
transferability to dependents. These revisions successfully addressed some of the
concerns that came from the initial implementation of the Post-9/11 GI Bill. However,
there remain other programmatic issues that need to be addressed. The passing of
additional educational and training options increased their options compared to previous
GI Bills. In addition, it eased the financial burden on veterans enrolled at distance
learning programs by providing a housing allowance. 13
Dortch, “The Post-9/11 Veterans Educational Assistance Act, Primer and Issues,” 2.
Meagan O’Toole-Pitts, “New Law Lowers Tuition for Out-of-State Vets,” What’s Up,
November 5, 2014, http://www.whatsuppub.com/features/local_news/article_217c1338-6508-11e4-aa9c001a4bcf6878.html (accessed November 6, 2014).
13
Cassandria Dortch, “The Post-9/11 Veterans Educational Assistance Improvements Act of 2010,
As Enacted,” Congressional Research Service, January 31, 2011, p. 1-3,
11
12
7
Along with the legislative action, President Obama passed Executive Order
#13607 “Establishing Principles of Excellence for Educational Institutions Serving
Service Members, Veterans, Spouses, and Other Family Members” on April 27, 2012.
This Executive Order was in direct response to reports of aggressive and deceptive
targeting of service members and their families by educational institutions. According to
the press release from the White House website, Executive Order #13607 provides seven
steps to improve the quality of information and services provided by schools. 14
•
Help Ensure Military and Veteran Students Have the Information They
Need: The Executive Order requires colleges to be more transparent in the
information provided about costs and outcomes. It also encourages all of the GI
Bill participating schools to provide the Know Before You Owe form to help
educate veterans by providing critical information on tuition and fees, available
federal financial aid, and estimated student loan debt after graduation. In
addition, the VA will publicly post on their website those schools that adhere to
the Executive Order.
•
Keep Bad Actors Off of Military Installations: Due to the reports of aggressive
targeting of soldiers, the Executive Order requires Department of Defense (DOD)
to set guidelines on how educational institutions gain access to military
instillations to eliminate those schools with detrimental recruiting and marketing
practices. Some egregious abuses include educational institutions providing
https://doyle.house.gov/sites/doyle.house.gov/files/documents/Education%20CRS%20report%20R41620%
20post911%20vets%20ed%20act.pdf (accessed August 1, 2014).
14
“Executive Order -- Establishing Principles of Excellence for Educational Institutions Serving
Service Members, Veterans, Spouses, and Other Family Members,” The White House, Office of the Press
Secretary, April 27, 2012, http://www.whitehouse.gov/the-press-office/2012/04/27/executive-orderestablishing-principles-excellence-educational-institutia (accessed August 20, 2014).
8
payments to commanders of military bases and recruiters to attract Soldiers and
steer them to a particular institution. 15
•
Crack Down on Improper Online Recruiting Practices: The VA is directed to
register the term “GI Bill” so that companies and schools cannot deceptively or
fraudulent market education services and programs. Some websites made it seem
that VA benefits were only available at their subset of schools. Other websites
attempted to mimic official government sites.
•
Provide Veterans with a Complaint System: The Executive Order directs the
DOD, VA, and Department of Education (ED) to develop a centralized complaint
system to centralize complaints and provide federal agencies information to allow
for follow-up enforcement.
•
Improve Support Services for Service Members and Veterans: It requires
colleges participating in veteran education benefit programs to provide clear
education paths for students and have financial aid counseling services that are
familiar with DOD and VA programs.
•
Provide Students with Better Data on Educational Institutions: Ensures
better reporting on different colleges in terms of student outcomes, to include
completion rates for veterans. This is to be a collaborate effort between DOD,
VA, and Department of Education. There is also the “GI Bill Comparison Tool”
Michael Stratford, “Obama to Crack Down on Deceptive Practices by Colleges that Recruit
Veterans,“ The Chronicle of Higher Education, April 27, 2012,
http://www.operationpromiseforservicemembers.com/Obama_to_Crack_Down_on_Deceptive_Practices_b
y_Colleges_that_Recruit_Veterans_042712.html (accessed April 15, 2015).
15
9
that helps provide veterans compare how their benefits translate at different
universities. 16
•
Strengthen Enforcement of Student Protections: It will require the VA and
DOD to work in partnership with ED, Department of Justice (DOJ), and
Consumer Financial Protection Bureau (CFPB) to effectively act on complaints of
improper activity. 17 This will help support initiatives such as new online
complaint system that allows student veterans to detailed the problems they’re
experiencing at certain universities and share information in regards to deceptive
tactics used by certain schools.
In addition to these actions, there has been support from States to have Congress close the
“loophole” that encourages for-profit colleges to use aggressive tactics to recruit military
veterans. The loophole specifically relates to the “90/10 rule.” The “90/10 rule” states
that 90% of the revenue for a for-profit school can come from government funds, while
10% has to come from private sources. However, due to a loophole in the law, the Post9/11 GI Bill benefits counts towards the 10% of private sources, instead of the 90% of
government funding. 18 Attorneys general for 21 states wrote a letter to the House and
Senate education and veterans-affairs committees to start legislation to change the
“90/10” rule, so that GI Bill and other benefits veterans receive count toward the 90% cap
Lauren Kirkwood, “More Veterans Taking Advantage of Post-9/11 GI Bill,” McClathcy DC,
March 17, 2014, http://www.mcclatchydc.com/2014/03/17/221479/more-veterans-taking-advantage.html
(accessed April 10, 2015).
17
“We Can’t Wait: President Obama Takes Action to Stop Deceptive and Misleading Practices by
Educational Institutions that Target Veterans, Service Members, and their Families,” The White House,
Office of the Press Secretary, April 26, 2012, http://www.whitehouse.gov/the-press-office/2012/04/26/wecan-t-wait-president-obama-takes-action-stop-deceptive-and-misleading (accessed August 20, 2014).
18
Goldie Blumenstyk, “Attorneys General Urge Congress to Close Military ‘Loophole’ at ForProfit Colleges,” The Chronicle of Higher Education, May 29, 2012, http://chronicle.com/article/AttorneysGeneral-Urge/132030/, (accessed August 15, 2014).
16
10
that colleges can receive from federal student-aid programs. Currently, There have been
attempts by U.S. Senator Richard Durbin and Senator Tom Harkin to pass a bill aimed at
regulating the “90/10” rule. However, due to differing opinions amongst the Republicans
and Democrats, the bill has yet to pass. Republicans are supportive of the for-profit
college industry and for-profit college leaders continue to lobby for their effective
outreach to veterans and service members. 19
Background Section
Purpose and Policy
The Post-9/11 GI Bill provides increased financial support and assistance to a new
generation of veterans who have served in Iraq and Afghanistan. The intent was that the
increased financial assistance would remove barriers to higher education and at the same
time encourage public, non-profit, and for-profit schools to assist veterans in their
transition. However, there is a growing concern that for-profit colleges are aggressively
recruiting veterans to receive GI Bill funds. Within a year and half of the Post-9/11 GI
Bill’s start, the staff of the Senate Health, Education, Labor and Pensions (HELP)
Committee released data showing that a disproportionate share of the new GI Bill
benefits were going to for-profit colleges. The concern was aggravated by the
questionable outcomes related to graduation percentages, high indebtedness, and loan
default rates for students in for-profit colleges. Furthermore, the cost to the taxpayer to
Goldie Blumenstyk, “Senator Takes Aim at For-Profit Colleges’ Reliance on Federal Money
and Aggressive Recruiting of Veterans,” The Chronicle of Higher Education, January 22, 2012,
http://chronicle.com/article/Senator-Takes-Aim-at/130426/ (accessed August 15, 2014).
19
11
send a veteran to a for-profit college was more than twice the amount to send the same
veteran to a public college. 20
Figure 2: Comparison chart of four-year colleges with graduation and loan statistics. 21
The results of a study on the Post-9/11 GI Bill lead the Senate HELP Committee
to reveal concern over the amount of Post-9/11 GI Bill funding for-profit colleges have
been receiving in recent years. The Senate HELP Committee provided a follow-up study
showing that for-profit colleges account for eight of the top 10 programs receiving Post9/11 GI Bill benefits. The first issue is that the money set aside for education is not
enough and veterans are forced to take on additional debt to pay for their education.
Another issue is that 66% of students enrolled in for-profit colleges withdrew without
receiving a degree or diploma. 22 The prevalence of student loan debt and lack of gainful
employment in the veteran community is concerning The Obama administration has been
focused on this issue and at the end of October 2014 released the “gainful employment”
20
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. i.
21
Robyn Smith, “Ensuring Educational Integrity,“ National Consumer Law Center, June 2014,
p.9, http://www.nclc.org/images/pdf/pr-reports/for-profit-report.pdf (accessed March 15, 2015).
22
Claire Zillman, “For-Profit Colleges Still Reap Millions from Veterans GI Bill,” Fortune,
November 11, 2014, http://fortune.com/2014/11/11/gi-bill-for-profit-colleges/ (accessed March 15, 2015).
12
rules; in order for colleges to gain access to federal loans, the estimated annual loan
payment of a typical graduate could not exceed 20% of the student’s discretionary
income or 8% of total earnings. 23 These rules hold the for-profit colleges accountable for
the quality of education and burden of costs placed on students. Education Secretary
Arne Duncan issued this statement in reference to the new rules.
“Career colleges must be a steppingstone to the middle class. But too many
hardworking students find themselves buried in debt with little to show for it.
That is simply unacceptable. These regulations are a necessary step to ensure that
college accepting federal funds protect students, cut costs and improve outcomes.
We will continue to take action as needed.” 24
The “gainful employment” rule could potentially eliminate some for-profit programs, but
it does not directly address the issue of for-profit colleges specifically targeting veterans
to gain access to their education benefits. There have been several attempts to address
the issue, but few have made an impact or produced any tangible results. In April 2012,
President Obama issued Executive Order #13607 to establish the “Principles of
Excellence” 25 to address the lack of support and resources to veterans and their families.
However, the 2014 HELP committee reported that only some for-profit schools put
policies in place to help improve graduation rates and graduates employment prospects in
response. In January 2012, Senator Dick Durbin from Illinois proposed a bill that would
change the way the federal funds recognize GI Bill benefits. The Military and Veterans
Education Protection Act would change the way the GI Bill and DoD Tuition Assistance
is recognized, changing it from private funding to federal funding. In addition, a bill to
23
Allie Bidwell, “Education Department’s Gainful Employment Rules Rebuffed,” U.S. News,
October 30, 2014, http://www.usnews.com/news/articles/2014/10/30/obama-administrations-gainfulemployment-rules-upset-student-groups-for-profits (accessed April 1, 2015).
24
Bidwell, “Education Department’s Gainful Employment Rules Rebuffed.”
25
“Executive Order -- Establishing Principles of Excellence for Educational Institutions Serving
Service Members, Veterans, Spouses, and Other Family Members,” (accessed April 10, 2015).
13
amend the Higher Education Act of 1965 was introduced that would alter the “90/10”
rule to “85/15” (S 1659, HR 3496). Senator Durbin expressed that if the loophole in the
Post-9/11 GI Bill continues, it gives for-profit colleges incentive to aggressively enroll
veterans. 26 There are others such Noah Black, vice president of communications for
Association of Private Sector Colleges and Universities (APSCU), who states that the
“90/10 rule” causes an increased risk of low-income students being denied access to
education. He argues that the “90/10 rule” is not a measure of institutional quality, but it
is a financial calculation that measures the socioeconomic student population of the
college. Opponents of the legislation argue that changing the funding rule is unfair, as it
holds for-profit schools to limits, while public schools are equally or more reliant on
federal aid. However, what is omitted from the argument is the fact that for-profit
colleges generally cost significantly more than comparable programs in non profit and
public schools. 27
Education Quality at For-Profit Colleges
Education quality amongst for-profit colleges has been a decisive issue as these
schools have grown in popularity. Veterans are choosing for-profit colleges at an
increasing rate due to their offerings in skilled trades, flexibility, online courses, and
convenient campus locations. Data on veterans’ graduation rates, grade point averages,
or post-college employment success are limited, as neither the VA nor federal education
“Two Years After Harkin Report Revealed Questionable Business Practices in For-Profit
College Industry, New Analysis Shows For-Profit Colleges Are Top Recipients of Post 9/11 G.I. Bill
Dollars,” U.S. Senate Committee on Health Education Labor and Pensions, July 30, 2014,
http://www.help.senate.gov/newsroom/press/release/?id=4390b234-dbda-460d-84e7-3a732a95fb0d
(accessed April 1, 2015).
27
Ashlee Kieler, Regulations Help to Rein In Runaway For-Profit Colleges, but Schools Still Find
Loopholes,” Consumerist, August 15, 2014, http://consumerist.com/2014/08/15/regulations-help-to-rein-inrunaway-for-profit-colleges-but-schools-still-find-loopholes/ (accessed April 2, 2015).
26
14
officials have systems in place to capture the data. 28 Due to that reason, the Senate HELP
Committee looked at overall student outcome data to assess the quality of education at
these for-profit colleges. Using information provided by the companies that run the forprofit colleges, the HELP Committee reported that in 2008-2009 about 60% of the total
students at the for-profit colleges receiving the GI Bill benefits left without receiving a
degree or diploma. In the same report, Embry-Riddle Aeronautical (private/non-profit)
and University of Maryland (public) had withdrawal rates of 29.6% and 22%
respectively. 29 The cause of withdrawals between the two types of schools has more
significance when looking at loan default rates. The National Center for Public Policy
and Higher Education found that students who do not finish school are 10 times more
likely to default on their loans. 30 Academically, for-profit colleges performed lower than
non-profit and public colleges on licensing exams according to a 2011 GAO report. 31
Although many of these for-profit colleges provide flexible schedules and benefits to
veterans, the continued investigations reveal that they underperform in successfully
graduating students and providing them the skills to join the workforce in comparison
with non-profit and public schools. In addition, for-profit schools cost more than other
programs.
Leo Shane III, “How Many Student Veterans Graduate? No One Knows,” Stars and Stripes,
January 7, 2013, http://www.stripes.com/how-many-student-veterans-graduate-no-one-knows-1.203125
(accessed August 7, 2014).
29
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. 5.
30
Michelle Camacho Liu, “Do For-Profit Schools Pass the Test?” National Conference of State
Legislature, June 2011, http://www.ncsl.org/research/education/do-for-profit-schools-pass-the-test.aspx
(accessed August 5, 2014).
31
Government Accountability Office, “Postsecondary Education Student Outcomes Vary at ForProfit, Nonprofit, and Public Schools,” p 7, December 2011, http://www.gao.gov/assets/590/586738.pdf
(accessed August 5, 2014).
28
15
For-Profit College Business Model and the “90/10 Rule”
One of the distinct differences between for-profit colleges versus non-profit and
public schools is their business model. The for-profit colleges are responsible to their
shareholders to maximize profit, while non-profit colleges that operate independently of
an owner focus on providing education to students. Senator Harkin summarizes the issue
when he said the following.
While the Post-9/11 GI Bill was designed to expand educational opportunities for
our veterans and servicemembers, I am concerned that it is primarily expanding
the coffers of the big corporations running these schools. It is evident that more
needs to be done to ensure that veterans and servicemembers…are receiving a
quality education-and that taxpayer dollars aren’t wasted on shoddy programs. 32
For-profit colleges devote less than a third of what public universities spend on educating
students, while charging nearly twice the amount. 33 In the HELP Committee report, it
found that in 2009 for-profit colleges spent nearly 23% of their revenue on marketing,
advertising, recruiting, and admissions staffing, while spending 17% on educational
instruction. It is evident that profit is prioritized over quality education. The investment
in marketing and recruiting is being used to attract a growing number of veterans and the
billions of dollars that come with their Post-9/11 GI Bill benefits. 34 These veterans are
facing aggressive recruiting from for-profit colleges because of the “90/10 rule.” As
written, the current “90/10 rule” provides a huge incentive that for-profit colleges have
Ashlee Kieler, “Aggressive Recruiting at Military Bases Pays Off: For-Profit Schools Received
$1.7B of Post-9/11 GI Bill Funds,” Consumerist, July 30, 2014,
http://consumerist.com/2014/07/30/aggressive-recruiting-at-military-bases-pays-off-for-profit-schoolsreceived-1-7b-of-post-911-gi-bill-funds/ (accessed July 31, 2014).
33
Chris Kirkham, “For-Profit Colleges Spend Much Less on Educating Students Than Public
Universities,” Huffington Post, May 25, 2011, http://www.huffingtonpost.com/2011/05/26/for-profitcolleges-spend_n_867175.html (accessed August 6, 2014).
34
Ben Kesling and Douglas Belkin, “For-Profit College Faulted Over Veteran Enrollment,” Wall
Street Journal, August 1, 2014, http://online.wsj.com/articles/california-cracks-down-on-university-ofphoenixs-veteran-enrollments-1406841329 (accessed August 6, 2014).
32
16
exploited by targeting veterans with Post-9/11 GI Bill benefits. 35 In 2012-2013, forprofit colleges exploited this loophole to the tune of $1.7 billion of Post-9/11 GI Bill
benefits. This total is more than double the amount that for-profit colleges received in
2009-2010 ($640 million). This trend shows that veterans continue to be a growing
target of the industry.
Principal Players
The population most affected by the Post-9/11 GI Bills is the veterans who have
earned this benefit and are using it to pay for their education and to support their families
as they attend school. The other group heavily invested in the debate is the for-profit
colleges and the companies that run them. Congress, the President’s Administration, and
State governments are feeling pressure from both camps, as advocacy groups on the
veteran’s side and lobbyist for the for-profit colleges attempt to gain support for their
respective viewpoint.
Congress: The Senate HELP Committee released their report titled “For Profit Higher
Education: The failure to Safeguard the Federal Investment and Ensure Student
Success” that brought the issue to national attention. From there, both Senator Tom
Harkin (D-IA), and Senator Dick Durbin (D-IL), and in the House Rep. Steve Cohen (DTN), have been advocates of changing the federal “90/10 rule” to “85/15 rule” and
having the GI Bill be included in the 90 percent of school funding from federal aid.
However, there are others in Congress that do not agree with the findings of the HELP
Tom Tarantino, “Protecting the GI Bill,” Iraq and Afghanistan Veterans of America, June 22,
2012, http://iava.org/blog/protecting-gi-bill (accessed July 1, 2014).
35
17
committee. House Rep. Jeff Miller (R-FL), who is the chairman of the House Veterans
Affairs Committee, says the “90/10 rule” is an arbitrary formula that does not accurately
portray the quality of for-profit schools. In addition, Senator John Isakson (R-GA),
chairman of the Senate Veterans Affairs Committee, states that these new rules would
limit the accessibility of educational opportunities to veterans. 36
Veteran Advocacy Groups: Student Veterans of America (SVA) and Iraq and
Afghanistan Veterans of America (IAVA) are advocacy groups who have led discussions
on the Post-9/11 GI Bill. Both groups have provided Congressional testimony to improve
the Post-9/11 GI Bill process and provide veterans a voice. IAVA and SVA have been
supportive of amending the “90/10” rule to the “85/15 rule” 37 In addition, they have been
active in working with different universities to increase outreach and provide veteran
support centers. Veteran Advocacy Groups are currently working with the VA and
Student Clearing House to collect better data on veteran experiences with the Post-9/11
GI Bill as a means to inform policy and provide clearer information on how the Post-9/11
GI Bill is impacting veterans.
Lobbyists: The companies running for-profit colleges are using lobbyists to influence
legislation. The industry is known to hire former Members of Congress and ex-Capitol
Hill staffers to help voice their position. They work with Administration officials and
36
Bryant Jordan, “Budget Proposal Restricts GI Bill Funding to For-Profit Colleges,”
Military.com, February 11, 2015, http://www.military.com/daily-news/2015/02/11/budget-proposalrestricts-gi-bill-funding-to-for-profit-colleges.html (accessed April 4, 2015).
37
Kate O’Gorman, “The 90-10 Rule: Why Predatory Schools Target Veterans,” NewGIBIll.org,
May 7, 2012, http://newgibill.org/blog/9010_rule_why_predatory_schools_target_veterans_1 (accessed
April 4, 2015).
18
Congress, claiming that the proposed regulations would eliminate education opportunities
to students. An example is the Apollo Group, which runs the University of Phoenix, who
spent $490,000 in the first quarter of 2014 lobbying in Washington, D.C. Bridgepoint
Education, which Senator Tom Harkin singled out for their low spending on educational
instruction versus their marketing budget, 38 spent $505,000 on federal lobbying in the
first quarter of 2014. There are others, such as Corinthian Colleges and Kaplan that are
investing large sums of money into lobbyists to dilute legislation aimed at curbing
practices that leave veterans in buried in debt. 39
State Governments: The state governments have the ability to protect student
consumers against fraudulent practices. According to the National Consumer Law Center
(NCLC), state governments can make a difference in areas that the federal government
cannot; the NCLC shows that there are a number of lawsuits and investigations initiated
by state governments into for-profit colleges. Moreover, Title IV of the Higher
Education Act differentiates the roles and responsibilities between the federal
government, accrediting agencies, and states. 40 States have the role to protect consumers,
impose minimum standards, prohibit deceptive business practices, approve schools, and
monitor compliance with the law.
David Halperin, “For-Profit Colleges Spend Big on Lobbyists to Fight Obama Regulation,”
Huffington Post, April 28, 2014, http://www.huffingtonpost.com/davidhalperin/for-profit-collegesspend_b_5221407.html (accessed April 4, 2015).
39
Halperin, “For-Profit Colleges Spend Big on Lobbyists to Fight Obama Regulation.”
40
Ashlee Kieler, “States Have the Power to Rein in For-Profit Colleges, They Just Don’t Use It,”
Consumerist, June 18, 2014, http://consumerist.com/2014/06/18/report-states-have-the-power-to-rein-infor-profit-colleges-they-just-dont-use-it/ (accessed April 5, 2015).
38
19
Figure 3: Higher Education Act Roles and Responsibilities. 41
Presidential Administration: The Presidential Administration has made strides through
Executive Order 13607 “Establishing Principles of Excellence for Educational
Institutions Serving Service Members, Veterans, Spouses, and Other Family Members” to
improve the Post-9/11 GI Bill. Most recently, the Fiscal Year 2016 President’s proposed
budget is attempting to close the loophole that allows for-profit colleges to consider GI
Bill benefits as non-government funding. 42 Both the Department of Education (DOE)
and Department of Veteran Affairs (VA) have worked to find ways to address the issues.
They have worked in collaboration with the SVA and the National Student
Clearinghouse, a non-for profit and non-governmental organization, to spearhead the
creation of meaningful data specific to veterans. This effort will provide the targeted
Smith, “Ensuring Educational Integrity,“ p. 13.
Claire Zillman, “Obama’s Budget Aims to Eliminate For-Profit Colleges’ GI Bill Loophole,”
Fortune, February 3, 2015, http://fortune.com/2015/02/03/gi-bill-for-profit-colleges-2/ (accessed April 5,
2015).
41
42
20
information needed to make improvements and see how that impacts the investment
made through the GI Bill program. 43
Policy Proposal Section
Policy Authorization
Our veterans must be protected against the current predatory practices of forprofit colleges. Currently, the GI Bill funding has a loophole where the funding is
considered private instead of a public source of funding. This distinction matters because
for-profit colleges are mandated to have at least 10% of their funding come from sources
besides the government. This has made veterans targets to be aggressively and
deceptively recruited by programs looking to exploit this loophole. This proposal would
amend the Higher Education Act (HEA) “90/10 rule” to re-classify the GI Bill funds as
federal, not private, sources of revenue under the “90/10 rule.” It would also restore the
original “85/15 rule” which was authorized by the 1992 Higher Education Act (P.L. 102235). 44 Closing the loophole would remove the incentive that for-profit colleges have to
seek out Post-9/11 GI Bill funding. The change to the stronger “85/15 rule” would
pressure those schools relying predominantly on taxpayer funding to improve their
quality and affordability. 45 This amendment would eliminate the ability of for-profit
Pauline Jelinek, “Half of Veterans on G.I. Bill Graduate, Report Estimates,” Huffington Post,
March 24, 2014, http://www.huffingtonpost.com/2014/03/24/veterans-gi-bill_n_5019385.html (accessed
April 5, 2015).
44
“Institutional Eligibility and the Higher Education Act: Legislative History of the 90/10 Rule
and Its Current Status,” Policyarhcive.org, January 2005, http://www.policyarchive.org/handle/10207/1904
(accessed April 10, 2015).
45
“Q&A on the For-Profit College “90-10 Rule,” The Institute for College Access & Success,
March 18, 2015, http://ticas.org/sites/default/files/pub_files/90-10_qa_march_18_2015.pdf (accessed April
10, 2015).
43
21
colleges’ to rely almost solely on federal funding. Below is the proposed language
needed to change (bold) 20 U.S.C. § 1094(a)(24).
In the case of proprietary institution of higher education, such institution will
derive not less than fifteen percent of such institution’s revenues from sources
other than funds provided under this subchapter and part C of chapter I of chapter
34 of title 42 or federal funding in the form of educational benefits (GI Bill)
provided by the Department of Veterans Affairs to an individual, calculated in
accordance with subsection (d)(1), or will be subject to the sanctions described in
subsection (d)(2) 46
Policy Implementation
The implementation of the HEA amendment would classify the GI Bill funding as
federal funding and the “85/15” rule would replace the “90/10” rule. The GI Bill would
be classified immediately after the HEA amendment is passed. However, the timeframe
of the implementation of the “85/15” rule would include a grace period of two years
before coming into effect. This would allow for-profit colleges the time necessary to
make adjustments to accommodate the new rule change. The government entity
responsible for oversight and enforcement would continue to be the Department of
Education. 47 In order to effectively enforce the new amendment, the Department of
Veteran Affairs would be required to send monthly usage reports to the Department of
Education. The Department of Education would use those reports to track for-profit
colleges receiving GI Bill funding and conduct an audit yearly to ensure compliance.
Those for-profit colleges that violate the HEA amendment in their first year would be
“20 U.S.C. 1094 – Program Participation Agreements,” U.S. Government Publishing Office,
January 7, 2011, http://www.gpo.gov/fdsys/pkg/USCODE-2011-title20/pdf/USCODE-2011-title20chap28-subchapIV-partF-sec1094.pdf (accessed April 10, 2015).
47
Rebecca R. Skinner, “Institutional Eligibility and the Higher Education Act: Legislative History
of the 90/10 Rule and Its Current Status,” CRS, November 6, 2007,
http://congressionalresearch.com/RL32182/document.php?study=Institutional+Eligibility+and+the+Higher
+Education+Act+Legislative+History+of+the+90%2F10+Rule+and+Its+Current+Status (accessed April
20, 2015).
46
22
placed in provisional certification status and if violated for the second year, the for-profit
college would lose eligibility of future federal funding. 48 This is consistent with the
current HEA. The added coordination and reporting between the Department of Veteran
Affairs and Department of Education would increase budget costs in implementing the
HEA amendment. However, the expectation is that through the proposed changes, the
government would be able to experience a cost savings from having less federal funding
going to for-profit colleges. Through the regulatory enforcement mechanisms of the
“85/15 rule” in conjunction with the reclassification of the GI Bill, for-profit colleges
would be discouraged from targeting veterans. Furthermore, the legislation proposed
would assist in reducing student loan defaults and ensure the investment in our veterans is
effectively utilized.
Policy Analysis
Advantages
The legislation will remove the incentive of certain for-profit colleges that look to
secure 90% of their funding through federal student aid programs and supplement the
remaining 10% through GI Bill funding. The intent of the “85/15 rule” and even the
“90/10 rule” was to protect federal programs from the predatory for-profit colleges that
seek to take advantage of taxpayers’ dollars. This change in policy is advantageous since
the amount of funding distributed to for-profit schools has increased substantially in the
last decade. For-profit colleges accounted for eight of the top 10 recipients of veteran
Rebecca R. Skinner, “Institutional Eligibility and the Higher Education Act: Legislative History
of the 90/10 Rule and Its Current Status.”
48
23
educational benefits in the 2012-2013 academic years. 49 This legislation would insure
that financial resources are being utilized to benefit veterans instead of being exploited by
for-profit schools with high attrition rates. In reference to the for-profit colleges, Senator
Durbin shared his thoughts on Corinthian Colleges.
On too many basic measures of value, for-profit colleges fail to meet minimum
standards. The recent collapse of Corinthian Colleges should serve as a warning
to students to think twice before enrolling in these schools and to taxpayers who
are subsidizing these schools, often up to 90% of their revenue. 50
By closing the GI Bill loophole, it will de-incentivize for-profit colleges from targeting
veterans and hopefully lead to veterans receiving a quality education. In addition, the
“85/15 rule” would provide more accountability to for-profit colleges since they would
no longer be able to combat high drop out rates with aggressive recruitment for federal
education benefits. 51 For-profit colleges would be kept from depending on federal
subsidies and continual turnover of students to maintain profits. Instead, they would have
to recruit students willing to pay the full tuition because of the advantages and
opportunities they offer through their educational programs. Essentially, this would shift
them closer to the competitive market that non-profit and public institutions compete in.
Janet Lorin, “Top Recipients of GI Bill Funds,” Bloomberg Business, July 30, 2014,
http://www.bloomberg.com/news/articles/2014-07-30/for-profit-colleges-lead-top-recipients-of-gi-billfunds (accessed April 11, 2015).
50
John Sandman, “Post-9/11 GI Bill was a Windfall for For-Profit Colleges: Senate Committee,”
Main St, July 31, 2014, https://www.mainstreet.com/article/post-911-gi-bill-was-windfall-profit-collegessenate-commi (accessed April 11, 2015). (Sandman 2014)
51
United States Senate Health, Education, Labor, Pensions Committee, “For Profit Higher
Education: The Failure to Safeguard the Federal Investment and Ensure Student Success,” Majority
Committee Staff Report, p. 43-45, July 30, 2012,
http://www.help.senate.gov/imo/media/for_profit_report/PartI-PartIII-SelectedAppendixes.pdf (accessed
April 20, 2014).
49
24
More emphasis would be focused on providing a high-quality education as a critical part
of their recruitment process. 52
This proposal would also help to ensure that the Post-9/11 GI Bill is improving
educational outcomes and providing comprehensive education benefits for veterans. 53
Senator Jim Webb, the author of the Post-9/11 GI Bill provided the following statement
as his vision for the bill.
The Post-9/11 GI Bill started with a simple concept: that we owe those people
who have served since 9/11 the same type of quality education benefits that those
who served in World War II received…I’m very proud to say that we are able to
do that. It continues to be a great investment in the future of our country through
the people who have served. 54
The statistics show that veterans are leaving for-profit colleges without completing their
degree programs and are left with student loan debt. 55 According to the HELP
Committee report on for-profit colleges, more than 95% of students at two-year for-profit
schools and 93% of students at four-year for-profit colleges took out loans in 2007. In
comparison, the borrowing rate at community colleges was 16.6% while four-year public
schools were 44.3%. 56 The Post-9/11 GI Bill is supposed to help veterans gain an
education without the financial burden, but the statistics show that is not the case. Many
for-profit colleges that receive Post-9/11 GI Bill funding have among the lowest
52
Government Accountability Office, “Postsecondary Education, Financial Trends in Public and
Private Nonprofit Institutions,” Report to the Ranking Member, Committee on Health, Education, Labor,
and Pensions, U.S. Senate, January 2012, p. 14-15, http://www.gao.gov/assets/590/587941.pdf (accessed
April 12, 2015).
53
Dortch, “The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill):
Primer and Issues,” p. 1-3.
54
Jim Webb, “Committee Approves Webb Provisions to Protect Post-9/11 GI Bill,”
Jameswebb.com, September 12, 2012, http://www.jameswebb.com/articles/military-andveterans/committee-approves-webb-provisions-to-protect-post-911-gi-bill (accessed April 12, 2015).
55
Zillman, “For-profit Colleges Still Reap Millions from Veterans GI Bill.”
56
Justine Sessions, “New Harkin Report: For-Profit Colleges Offer High Debt, Few Diplomas,”
U.S. Senate Committee on Health, Education, Labor, and Pensions, September 30, 2012,
http://www.help.senate.gov/newsroom/press/release/?id=aafe9170-4785-44e7-a270-d142e94c64a8
(accessed April 11, 2015).
25
graduation rates, highest tuition rates, and highest student loan default rates. 57 These forprofit colleges present a risky investment to veterans and the taxpayers that subsidize the
education. The most recent findings from the Student Veterans of America show that
veterans who attend public schools are almost seven times more likely to earn degrees,
than students attending for-profit colleges. 58
Figure 4: For-Profit College Comparison Infographic 59
Veterans’ successes at public colleges represent what Senator Webb had in mind when he
authored the Post-9/11 GI Bill. 60 The intent of the proposed legislation was to ensure that
Mamie Lynch, Jennifer Engle, and Jose L. Cruz, “Subprime Opportunity, The Unfulfilled
Promise of For-Profit Colleges and Universities,” The Education Trust, November 22, 2010,
http://edtrust.org/resource/subprime-opportunity-the-unfulfilled-promise-of-for-profit-colleges-anduniversities/ (accessed April 11, 2015).
58
“SVA Release Findings from the Million Records Project,” Student Veterans of America, March
24, 2014, http://www.studentveterans.org/index.php/media-news/200-sva-releases-findings-from-themillion-records-project (accessed April 11, 2015).
59
Jasper McChesney, “Lobbying Makes Low-Performing For-Profit Colleges Highly Profitable,”
Republican Report, April 27, 2012, http://www.republicreport.org/2012/lobbying-makes-low-performingfor-profit-colleges-highly-profitable/ (accessed April 11, 2015).
57
26
the money invested reflected the sacrifice made by those who served post 9/11. The
impact of the legislation is that it will prevent for-profit colleges to see veterans as a
lucrative mark to maximize profits and prevent aggressive and fraudulent marketing. 61
The other issue that the proposed HEA amendment would positively influence is
reducing student loan defaults and eliminating wasteful government spending. The
reinstatement of the “85/15 rule” and closing the loop-hole in GI Bill funding will reduce
the amount of federal funding going to for-profit colleges. The continued federal
investment into for-profit colleges that are failing veterans is contributing to the potential
student loan
crisis. 62
Figure 5: For-Profit Company Lobbying Amounts 63
For-profit colleges are not a good investment for both the student veteran and the tax
payer. In the 2012 HELP report, it found that the 15 largest for-profit education
companies received 86% of their revenue from federal aid and spent $3.7 billion on
Dortch, “The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill):
Primer and Issues,” p. 1-3.
61
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. 2.
62
Jenna Smialek, “Student-Loan Market Recalls Subprime Crisis for U.S. Treasury,” Bloomberg
Business, November 6, 2014, http://www.bloomberg.com/news/articles/2014-11-06/student-loan-marketrecalls-subprime-crisis-for-u-s-treasury (accessed April, 12, 2015).
63
“For-Profit Education,” OpenSecrets.org,
https://www.opensecrets.org/industries/indus.php?ind=H5300 (accessed April 12, 2015).
60
27
marketing and advertising. 64 University of Phoenix, owned by Apollo Group, spent an
average of $2,225 on marketing per student in 2010 while spending only $892 per student
on instruction. 65 In addition to marketing and advertising, for-profit colleges and the
companies that own them are actively involved in lobbying. The issue is that the forprofit colleges take the federal money they receive from taxpayers and use it to lobby
members of Congress and the White House to ensure they continued to receive federal
funding and make their profits. 66 The HEA amendment can help mitigate the wasteful
government spending and limit the budget and incentive of for-profit colleges to
aggressively recruit veterans.
Disadvantages
Opponents perceive the proposed HEA amendment that counts the Post-9/11 GI
Bill as federal funding and reduces the “90/10 rule “to” 85/15 rule as an improper action
by the federal government. The Association of Private Sector Colleges and Universities
(APSCU) states that there are processes in place to ensure that the higher education
programs eligible for Post-9/11 GI Bill and other veteran educational benefits have been
screened. This includes the federal government, accrediting agencies, and state
governments that have the regulatory oversight. 67 It is unfair to enforce the “90/10 rule”
or “85/15 rule” to for-profit colleges only when public colleges and non-profit colleges
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. 1-3.
65
Ashlee Kieler, “Should For-Profit Colleges Be Allowed to Spend Taxpayers’ Money to Put
Their Names on NFL Stadiums,” Consumerist, February 5, 2015,
http://consumerist.com/2015/02/05/should-for-profit-colleges-be-allowed-to-spend-taxpayers-money-toput-their-names-on-nfl-stadiums/ (accessed April 12, 2015).
66
Jasper McChesney, “Lobbying Makes Low-Performing For-Profit Colleges Highly Profitable.”
67
Jeff Corpsey, “Best Practices for Military and Veteran Students,” APSCU, February 2013,
http://www.career.org/policy-and-issues/federal-issues/military-veterans-ed/upload/MVBPBrochure_Feb2013.pdf (accessed April 14, 2015).
64
28
are not subject to the same rule. 68 Also, the “90/10 rule” is arbitrary and does not
indicate school’s quality, but instead measures the socioeconomic position of institution’s
student population. 69 The GAO study showed that colleges with a higher percentage of
low-income students were more likely to have a higher “90/10 rule” rate. 70 The “90/10
rule” or the “85/15 rule” does not provide any information besides the fact that the
college is educating those that require federal assistance to obtain higher education. The
question arises whether there should be a “rule” in place and whether the federal
government should be determining the amount of federal funding by some arbitrary ratio.
Some groups see the ratio as a sanction on veteran education benefits and a “90/10 rule”
amendment would be an act to punish for-profit colleges, but those that will be impacted
are the students. If the public policy goal is to reduce college costs and increase
enrollment of low-income students and high-risk populations, the “90/10 rule” or the
“85/15 rule” makes that more difficult. Those opposed to the current “90/10 rule”
suggest eliminating the rule all together, because it provides incentives to for-profits to
raise their tuition and fees above the amount of fund available through federal funding in
order to generate non-federal funding to meet the “90/10 rule.” This in effect makes it
harder for low-income students to enroll. 71 Instead of enforcing the “90/10 rule or the
“85/15 rule,” it can be argued that the rule be removed and institutions be evaluated by
direct measurements of education quality to include licensing rates on state licensing
68
Mark Kantrowitz, “Consequences of the 90/10 Rule,” Edvisors.com, August 19, 2013,
https://www.edvisors.com/media/files/student-aid-policy/20130819-90-10-rule.pdf (accessed April 14,
2015).
69
Zillman, “Obama’s budget aims to eliminate for-profit colleges’ GI Bill loophole.”
70
Government Accountability Office, “For‐Profit Schools: Large Schools and Schools that
Specialize in Healthcare Are More Likely to Rely Heavily on Federal Student Aid,” Report to
Congressional Committees, October 2010, http://www.gao.gov/assets/320/310897.pdf (accessed April 13,
2015).
71
Skinner, “Institutional Eligibility and the Higher Education Act: Legislative History of the 90/10
Rule and Its Current Status,” p. 8-9.
29
exams, pass rates on independent competency tests, and other relevant metrics. This
would provide better clarity on how for-profit colleges are performing and base federal
aid by those criteria.
Another criticism of the current proposed HEA amendment is that it would limit
college access to veterans who rely on federal financial aid programs. The proposal
would cause some for-profit colleges to exceed the cap and force them to close down. It
would also increase the incentive for for-profit colleges to raise their tuition and fees
above the federal aid amounts in order to generate the non-federal amount to meet the
new parameters of the proposal. This would force veterans to pay more at for-profit
colleges if the proposal is passed. With less for-profit colleges and potential tuition and
fee increases, this could decrease education opportunities for veterans. The value of forprofit colleges is that they fill a unique need in the higher education market and it is
reflected in their diverse student body. For-profit colleges
provide opportunities that traditional colleges do not
provide. Flexibility of schedule, liberal transfer acceptance
policies, and online course allow veterans to tailor their
educational needs with their schedule. The for-profit
colleges provide them access to post secondary education
with career skills leading to employment opportunities.
Figure 6: Types of credentials veterans earned at for-profit colleges 72
Seventy-five percent of the total numbers of credentials earned by veterans at for-profit
colleges are certificates and associate degrees. To put that in perspective, for-profit
72
Ibid, 7.
30
colleges account for about one-third of all the certificates and associate degrees awarded
in the U.S. 73 Although the proposed HEA amendment works to protect veterans, there
are still tradeoffs to consider in the implementation of the proposed policy.
Political Analysis
The key stakeholders that will be impacted by the proposed HEA amendment are
for-profit colleges and veterans enrolling in for-profit colleges. There are advocates on
both sides and in recent times it has been a politically charged issue. 74 The for-profit
colleges are the key stakeholders against the proposed HEA amendment. They have also
lobbied several members of Congress, with a majority being Republican. Those in favor
of the proposed HEA amendment are mainly veteran advocate groups who have support
from many Democratic members of Congress. 75
Apollo Group (University of Phoenix), Education Management Corp., Kaplan,
Corinthian Colleges, Career Education Corp., Bridgepoint Education, DeVry, and ITT
Tech are examples of the big companies that are key stakeholders running the for-profit
colleges and influencing the industry. The APSCU is also a key stakeholder that
advocates for the for-profit colleges. Recently, the APSCU filed a lawsuit challenging
the Department of Education on its new “gainful employment” rule that ties careereducation programs’ access to federal funding to the success of their graduates. 76
“America’s Private Sector Colleges and Universities: Generating Real Value for Students and
Society, APSU, Summer 2013, p. 2-3, http://www.career.org/news-and-media/pressreleases/upload/APSCU-Generating-Real-Value-Final.pdf (accessed April, 15, 2015).
74
Michael Stratford, “What a GOP-Led Congress Means for Higher Ed,” Inside Higher Ed,
November 5, 2014, (accessed April, 16, 2015).
75
Stratford, “What a GOP-Led Congress Means for Higher Ed.”
76
Catherine Dunn, “Two Lawsuits Set Up New Battle Over For-Profit Colleges Regulations,”
International Business Times, November 7, 2014, http://www.International Business Times.com/twolawsuits-set-new-battle-over-profit-colleges-regulations-1720877 (accessed April 18, 2015).
73
31
APSCU and for-profit colleges have also been active in lobbying and hiring consultants
who have strong ties to Congress and are established figures in education. 77 The APSCU
CEO is Steve Gunderson who is a former House member (R-WI) and APSCU Executive
Vice President is Sally Stroup who was the Assistant Secretary of Education under
George W. Bush. The current House Education Committee Chairman Rep. John Kline
(R-MN) received an increase in campaign contributions from for-profit colleges. He is
also pushing legislation called “Supporting Academic Freedom through Regulatory
Relief Act” that will help the industry preserve its access to federal student loans. 78
The key stakeholders of the proposed amendment to the HEA are veterans
utilizing the Post-9/11 GI Bill. Veteran advocate groups such as Student Veterans of
America (SVA) and Iraq and Afghanistan Veterans of America (IAVA) support these
veterans’ interests. The advocacy groups provide testimony to Congress, provide support
to veterans attending schools, and help to continue the discussion of how to make the
Post-9/11 GI Bill more effective. 79 Other key stakeholders that are supportive of the
proposed amendment are President Obama and key Congressmen. President Obama
released Executive Order #13607 to establish the “Principles of Excellence” protecting
veterans against for-profit colleges and working to improve the GI Bill. 80 In late October
2014, the Obama administration released the “Gainful Employment” rules to set
David Halperin, “The Perfect Lobby: How One Industry Captured Washington, DC,” The
Nation, April 3, 2014, http://www.thenation.com/article/179161/perfect-lobby-how-one-industry-capturedwashington-dc# (accessed April 18, 2015).
78
Fredereka Schouten and Christopher Schnaars, “For-profit Colleges Giving Big to Helpful
House Members,” USA Today, July 24, 2013,
http://www.usatoday.com/story/news/politics/2013/07/23/for-profit-colleges-contributions-houseregulations/2579041/ (accessed April 18, 2015).
79
Kate O’Gorman, “The 90-10 Rule: Why Predatory Schools Target Veterans.”
80
“Executive Order -- Establishing Principles of Excellence for Educational Institutions Serving
Service Members, Veterans, Spouses, and Other Family Members,” (accessed April 10, 2015).
77
32
regulations on the for-profit education industry. 81 Veterans have also found support in
Congress. As mentioned earlier, Senator Tom Harkin (D-IA) has been one of the most
influential congressmen. As the Chairman of the Senate HELP Committee, he helped put
the issue to the forefront in 2012 with the HELP report titled, “For Profit Higher
Education: The Failure to Safeguard the Federal Investment and Ensure Student
Success,” concluding a two-year investigation of the for-profit education industry. In
2014, the HELP Committee released another report titled, “Is the New GI Bill Working?
For-Profit Colleges Increasing Veteran Enrollment and Federal Funds” investigating the
GI Bill and the role for-profit colleges were playing in veteran education. 82 These reports
provided the impetus for investigations at the state level, executive orders and department
of education regulations, and discussion within the public of the effectiveness of forprofit colleges. 83
Gallup report conducted between November 3 – December 18, 2014 showed that
61% of Americans believe education beyond high school is available to anyone in
America. Although many feel that it is attainable, only a small minority (21%) believes
higher education is affordable. 84 These statistics show the overall view that the financial
burden is a factor when considering higher education. Public Agenda released a report
recently polling current students and alumni of for-profit colleges and their experiences.
Both students and alumni said their schools were expensive and almost half (47%) of
Paul Fain, “Gainful Employment Arrives,” Inside Higher Ed, October 30, 2014,
https://www.insidehighered.com/news/2014/10/30/final-gainful-employment-rules-drop-loan-default-rate
(accessed April 18, 2015).
82
John Sandman, “Post-9/11 GI Bill was a Windfall for For-Profit Colleges: Senate Committee.”
83
Goldie Blumenstyk, “Attorneys General Urge Congress to Close Military ‘Loophole’ at ForProfit Colleges.”
84
Brandon Busteed and Stephanie Kafka, “Most Americans Say Higher Education Not
Affordable,” Gallup, April 16, 2015, http://www.gallup.com/poll/182441/americans-say-higher-educationnot-affordable.aspx?utm_source=Education&utm_medium=newsfeed&utm_campaign=tiles (accessed
April 18, 2015).
81
33
current students worry that they have taken upon too much debt. 85 The statistics show
that alumni in particular are skeptical about the value of their degree. Approximately
32% of alumni thought their degree was not worth the cost and 30% say that it remains to
be seen.” The remainder (37%) felt that their degree was well worth the investment. 86
Many of the students and alumni chose for-profit colleges due to their availability of
online classes, accelerated programs, and hands-on support services. However, these
same students and alumni attending these for-profit colleges say nothing comes to mind
when they hear the term “for-profit college.” In fact, about 65% of current for-profit
students and alumni cannot tell you whether the school they attended was a for-profit or
not. 87 For-profit colleges provide accessibility to the public but are a costly investment to
students and many remain unconvinced about the value of the education.
During November of 2014, Republicans won several key Senate races to take
control of both chambers of Congress. This will provide a changed dynamic in federal
higher education policy as President Obama and Republicans have different perspectives
on higher education. 88 President Obama and key Senate democrats have led policies to
regulate the for-profit college industry by implementing a full proposal for college rating
systems and the “gainful employment” regulations. 89 Republicans are looking to roll
back federal requirements, but they are also looking to limit federal spending towards
education. These differing perspectives put for-profit colleges in a precarious place. One
of the fears for those hoping for change is that the new shift in power is most likely to
Christopher DiStasi, Carolin Hagelskamp, and David Schleifer, “Profiting Higher Education?
What Students, Alumni, and Employers Think About For-Profit Colleges,” Public Agenda, February 2014,
http://www.publicagenda.org/files/ProfitingHigherEducation_PublicAgenda_2014.pdf (accessed April 18,
2015).
86
Ibid, p. 22.
87
Ibid, p. 23.
88
Michael Stratford, “What a GOP-Led Congress Means for Higher Ed.”
89
Alan Bidwell, “Education Department’s Gainful Employment Rules Rebuffed.”
85
34
result in continued deadlock on higher education issues since Republicans will not have
veto-proof margins in either the Senate or the House of Representatives. 90 Another
important change to note is that Senator Lamar Alexander will transition from ranking
member of the Senate education committee to chairman. This change is significant
because he brings a new perspective to the Higher Education Act through his past
experiences as the U.S. education secretary and a university president. 91 He is an
advocate of simplifying the federal aid process and desires to “start from scratch” on
rewriting the HEA. 92 Although the Republicans are opposing rules the President’s
administration has established, Senator Alexander is a proponent of seeing colleges and
universities share fiscal responsibility for students who drop out of school or default on
their student loans. 93
The difficulty with the bipartisan political climate is that any proposed
amendments may be held in deadlock. Regardless, Congress is slated to reauthorize the
HEA. Although Republicans hold both the House and Senate, the president can still veto
legislation and the Republicans do not have the two-thirds majority required to overturn a
presidential veto. The proposed HEA amendment places additional regulation on forprofit colleges that Republicans do not want. 94 In order to pass the proposed HEA
amendment, it might come at a cost of appeasing Republicans by limiting federal aid and
adhering to the budget caps. In many ways, these concessions by each party can be seen
Michael Stratford, “What a GOP-Led Congress Means for Higher Ed.”
Ibid.
92
Ibid.
93
Keith Button, “10 Ways a Republican-led Congress Could Impact Higher Ed in 2015,”
Education Dive, December 9, 2014, http://www.educationdive.com/news/10-ways-a-republican-ledcongress-could-impact-higher-ed-in-2015/341054/ (accessed April 20, 2015).
94
Allesandra Lanza, “How a Republican-Led Congress Could Affect Student Loans,” US News,
November 12, 2014, http://www.usnews.com/education/blogs/student-loan-ranger/2014/11/12/how-arepublican-led-congress-could-affect-student-loans (accessed April 20, 2015).
90
91
35
as a positive. It would effectively protect veterans against aggressive recruiting practices
by for-profit colleges, while ensuring that federal educational funding stays within the
budget caps.
Recommendation
The recommendation is to go forward with the proposed HEA amendment
ensuring that the statutory provision of the “90/10 rule” is changed to the “85/15 rule,”
Moreover, all federal dollars, including those that come from the Post-9/11 GI Bill, must
be counted as federal dollars. If the HEA remains unchanged, for-profit colleges will
continue to aggressively target veterans for their benefits. The current structure of the
HEA fails to protect veterans against for-profit colleges seeking to exploit veterans’ Post9/11 GI Bill benefits.
The proposed HEA amendment closes the GI Bill loophole that incentives forprofit colleges from targeting veterans. This would be a desired outcome of the proposed
amendment, because it effectively protects veterans against deceptive and misleading
recruiting. It removes the systemic issue of veterans’ benefits counting as other than
federal funding within the “90/10 rule.” Another advantage of the proposed HEA
amendment is that it helps reduce student loan defaults and wasteful government
spending. The “85/15 rule” directly reduces the amount of federal loans invested in forprofit colleges run by publicly traded corporations. Although for-profit colleges enroll
only 10% of higher education students, it accounts for nearly half of all federal loan
student defaults. 95 Many for-profit colleges have been able to survive by targeting
veterans and leveraging the current HEA structure. However, with the proposed HEA
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. 13.
95
36
amendment, those for-profit colleges will have to recruit by offering attractive
educational programs that lead to successful job placements. The proposed changes will
remove the strong incentives for for-profit colleges to aggressively recruit veterans,
reduce student loans and wasteful government spending, and encourage for-profit
colleges to increase the quality of their educational programs.
Critics of the proposed HEA changes lobby that the federal government would be
taking unnecessary and improper action. Opponents of the proposed amendment call
attention to the fact that the “90/10 rule” does not properly measure educational quality.
However, that was never its intention. Instead, Congress designed the “90/10 rule” to
eliminate those for-profit colleges that depended heavily on federal funding. 96
Additionally, the “90/10 rule” is aimed to stem abusive practices by for-profit colleges
and decrease student loan defaults. 97 Therefore, the proposed argument made by forprofit colleges does not reflect the original regulatory purpose of the law. 98 Another
issue critics have with the proposed HEA amendment is that it limits veterans’ access to
for profit college. These colleges argue that the high enrollment of veterans is indicative
of the fact that they meet an important market need. 99 However, a GAO report released
in December 2011 provided empirical evidence that for-profit colleges experienced worse
outcomes than not for profit or public colleges on six critical metrics to include
graduation rate, unemployment rate, borrowing rate, debt load, loan default rate, and
Reigel, “Closing the 90/10 Loophole in the Higher Education Act,” George Washington Law
Review, p. 290, January 2013, http://www.gwlr.org/wp-content/uploads/2013/01/Riegel_81_1.pdf
(accessed April 20, 2015).
97
Skinner, “Institutional Eligibility and the Higher Education Act: Legislative History of the 90/10
Rule and Its Current Status.”
98
Ibid, p. 291.
99
America’s Private Sector Colleges and Universities: Generating Real Value for Students and
Society, APSU, Summer 2013, p. 2-3.
96
37
licensing exam pass rate. 100 The results are evidence that for-profit colleges are not
meeting the needs of veterans. 101
By making the changes in the proposed HEA amendment, we can better protect
our veterans. We can ensure that federal funding is properly accounted for, and we can
take the necessary steps to regulate for-profit colleges from aggressively marketing to
veterans. With these collective actions, the purpose of the Post-9/11 GI Bill to provide
veterans with the educational and economic advancement opportunities can be preserved.
Government Accountability Office, “Postsecondary Education Student Outcomes Vary at ForProfit, Nonprofit, and Public Schools,” p. 5-7.
101
United States Senate Health, Education, Labor, Pensions Committee, “Is the New G.I. Bill
Working?: For-Profit Colleges Increasing Veteran Enrollment and Federal Funds,” p. 13.
100
38
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2015).
—. Obama's Budget Aims to Eliminate For-Profit Colleges' GI Bill Loophole. February
3, 2015. http://fortune.com/2015/02/03/gi-bill-for-profit-colleges-2/ (accessed
April 5, 2015).
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JASON KIM
PHONE: (630) 660-6586 / EMAIL: [email protected]
SUMMARY OF QUALIFICATIONS
Highly organized and detail-focused Resource Manager with an exceptional track record of accurately and
effectively executing multiple customer-driven assignments, simultaneously, in deadline-oriented and
fiscally constrained environments. Seeking career development and challenging opportunities that promote
growth through management and leadership.
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Skilled in the development of Intelligence Program Budget Submissions (IPBS) and Intelligence
Program Budget Review (IPBR) submissions within the Intelligence and Department of Defense
(DoD) communities.
Provided expert budgeting and accounting analysis to the Department of Army’s top leaders to
include the Chief of Staff, Vice Chief of Staff, and the Sergeant Major of the Army for their
critical programs and offices.
Trained Resource Management Office staffs in recording of obligations and disbursements to
accurately reflect the status of accounts by appropriation, fund source, program and allotment, and
program and reimbursable authority.
Project Management Professional (PMP), Certified Government Financial Manager (CGFM)
and Certified Defense Financial Manager w/Acquisitions (CDFM-A).
Active DoD TS/SCI with Counter Intelligence Polygraph (10/2013).
PROFESSIONAL EXPERIENCE
Deloitte
Intelligence Community (May 2013 - Present)
Senior Federal Financial Analyst
Provide support to the Intelligence Community (IC) / National Geospatial-Intelligence Agency (NGA) and
DoD working through the development of all phases of the Intelligence Program Budget Submissions
(IPBS) and Intelligence Program Budget Review (IPBR). Advise and inform Senior IC Leaders in budget
development, presentation, and formulation that is reviewed and approved by Office of Management and
Budget (OMB) and six Congressional committees.
Key Contributions:
• Deliver critical resource management analysis and guidance for multiple appropriations (e.g.
O&M, DW, RDT&E, DW, P, DW, etc.) to evaluate relationships between major program changes
ensuring optimal funding to meet National Security Priorities.
• Develop briefs and budget justification documents to include Congressional Budget Justification
Book (CBJB) and the Congressional Justification Book (CJB) narratives and exhibits for NGA
leadership and Key Components.
Office of the Chief of Staff, Army
Pentagon (August 2010 – April 2013)
Senior Budget Analyst
Executed the management of the $20 Million annual budget from Program Objective Memorandum (POM)
through execution and review (planning, programming, budget, and execution phases of PPBEs cycle) for a
4-Star Strategic level office. Managed directed fiscal resources for Office of the Chief of Staff, Army
(OCSA) agencies to include contracting, civilian pay, travel, supplies, and equipment. Provided guidance to
twelve different directorates of OCSA. Assisted in the development and maintenance of office policies,
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procedures, and administrative files and support. Developed budgetary strategy for POM and FYDP
development for Army leadership review.
Key Contributions:
• Effectively prepared and represented all POM and year of execution budget issues for the Office
of the Chief of Staff, Army (OCSA), totaling 15 programs, to the Army Secretariat.
• Successfully transitioned OCSA from their old Accounting System to the new Systems
Applications and Products (SAP) platform streamlining 70 stove-pipe systems into one allencompassing accounting database.
• Appointed lead analyst for the newly formed OCSA Audit team in preparation for the Statement
of Budgetary Resources (SBR) Audit and Headquarters Army Audit in 2013.
Special Operations Command Central
Deployed / Middle East (May 2011 – May 2012)
J-4 Logistics Director
Served as one of the key primary advisor to the Combined Forces Special Operations Command Central
(CFSOCC) Commander for all joint logistics matters to include supply, maintenance, transportations,
acquisition logistics, and contracting issues. Directed contingency operations to include logistics planning,
deployment and redeployment activities, accountability for equipment, vehicle management, and materiel
management operations.
Key Contributions:
• Successfully executed Director of Logistics responsibilities to include logistical support to SOF
personnel located in eight countries within the Central Command Area of Responsibility (AOR) to
meet SOF prerogatives and mission requirements.
• Supervised over 20 personnel to include Army, Navy, Air Force, and Marine Corps NonCommissioned Officers (NCOs) in a Joint Logistic Environment to support Combined Forces
Special Operations Command Central (CFSOCC).
CIVILIAN EDUCATION
MILITARY EDUCATION
B.A. in Economics, 2004
University of Illinois at Chicago – Chicago, IL
Automated Supply Logistics Specialist, 12 wks
Quartermaster School – Fort Lee, VA
M.A. in Global Security Studies, Present
Johns Hopkins University – Washington, D.C.
Logistics Officer Leadership Course, 19 wks
Logistics School – Fort Lee, VA
AWARDS AND CERTIFICATIONS
 Superior Civilian Service Award
 Defense Meritorious Service Medal
 Meritorious Service Medal
 Certified Defense Financial Manager - Acquisitions (CDFM-A)
 Graduate School Master Certificate in Federal Financial Management (MCFFM)
 (Pending) Certified Government Financial Manager (CGFM) (Passed 2 of 3 Exams)
PROFESSIONAL ORGANIZATIONS
 American Society of Military Comptrollers (ASMC)
 Association of Professionals in Business Management (APBM)
 Advanced Government Accountability (AGA)
 Reserve Officers Association (ROA)
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