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President Barack Obama, alongside Michelle Obama signs an order to protect U.S. service members from deceptive targeting by educational institutions, after speaking to troops at Third Infantry Division Headquarters at Fort Stewart in Hinesville, Ga.
WASHINGTON -- The Obama administration wants to trademark the term "GI Bill" in an effort to shield veterans and military families being swindled or misled by schools that target their federal education benefits.
President Barack Obama signed a wide-ranging order on Friday that partially addresses growing complaints about fraudulent marketing and recruiting practices aimed at military families eligible for federal education loans under the GI Bill.
The president and first lady Michelle Obama addressed troops at the Fort Stewart Army post in Georgia, where Obama signed the executive order mandating several new education protections for military service members.
There is little the federal government can do to shut down diploma mills, but the new protections would make it harder for post-secondary and technical schools to misrepresent themselves to military students.
The main target of the White House action is for-profit colleges and universities that market heavily to military families because of the easy availability of federal loan money under the GI Bill.
Some post-secondary schools target current and former military service members using deceptive military-themed websites that appear to be government-run or connected to the GI Bill benefit system, administration officials said.
'Know Before You Owe'
The financial regulation overhaul that Obama signed in 2010 included the creation of a Consumer Financial Protection Bureau with specific authority to protect members of the military from predatory financial practices.
The law set up an Office of Service Member Affairs to help members of the military and their families "make better informed decisions regarding consumer financial products and services."
Bills pending in Congress, largely backed by Democrats and unlikely to become law soon, would do many of the same things Obama was ordering Friday.
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Obama's order will also set a new gauge that potential students can use to calculate how much a school will really cost in tuition and fees. Schools are asked to voluntarily participate in the "Know Before You Owe" system this school year and would be required to do so next year.
Federal money, most of it through the financial aid students receive, accounts for up to 90 percent of for-profit colleges' revenue — even more if veterans attend the school on the GI Bill.
Some schools spend a quarter or more of their revenue on recruiting, far more than traditional colleges. In some cases, recruiting expenses approach what these institutions spend on instruction.
A recent Senate report on 15 large, publicly traded for-profit education companies said they got 86 percent of their revenue from taxpayers and have spent a combined $3.7 billion annually on marketing and recruiting.
Military veterans are particularly attractive recruiting targets because they come with generous federal tuition support and also don't count toward a limit called the "90/10" rule, which requires colleges to get at least 10 percent of their revenue from nonfederal sources.
Student Veterans of America, a leading campus veterans group, applauded the White House announcement, saying the executive order would help stop "deceptive and misleading" practices at educational institutions.
The Association of Private Sector Colleges and Universities, which represents for-profits, said in a statement it was disappointed that Obama "decided to bypass the Congress" with an executive order.
"Career-oriented institutions proudly serve military and veteran populations, and work with congressional leaders in a bipartisan manner to address concerns about veteran education across all sectors of higher education," the lobbying group said.
Quality at for-profit colleges varies widely, and many are a good fit for students, particularly adult learners looking for flexible scheduling and specialized career training that often requires a certificate but not a degree.
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But while comparing graduation rates can be misleading for those reasons, for-profit schools on average have lower success rates than traditional colleges on a variety of measures. The Senate report found that almost 2 million students withdrew from large for-profit colleges over a three-year period. Among those who enrolled at 10 large chains in 2008-2009, 54 percent had quit by the summer of 2010.
Default rate
Meanwhile, the latest figures from the Education Department put the default rate on federal student loans for students at for-profit colleges at 15 percent, compared with 7.2 percent at public nonprofit universities and 4.6 percent at private nonprofit colleges.
The industry points out that's partly because its schools tend to serve lower-income students. But difficulties transferring credits and having credentials from for-profit colleges rewarded in the job market also play a role.
The Obamas were to be joined in Georgia by Holly Petraeus, the assistant director of the Consumer Financial Protection Bureau focused on economic security for military families. She's the wife of David Petraeus, the four-star general and current CIA director.
Unlike many recent trips in which Obama has visited states that are central to his re-election, his visit to Georgia — a solidly Republican state — has no obvious political benefit.
The president has, however, focused on initiatives aimed at attracting young voters, and many of the military service members who would benefit from Friday's action fall into that category.
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Leave a Comment:
Thank you writer for giving us an "apples and oranges" comparison. The information presented in this article touched on things but never gave any detail, without detail insight to "true" figures/statistics just cannot be made.
Its apparent that something needs to be done to remedy the situation with "for-profit" institutions going after government money. This article just doesn't present the issues very well.
Go for profit schools should be taken to task for all they target. I am glad the attention has been brought by the Vets.
Maybe someone will start regulating these schools. Fraud is fraud. Some of these schools suck every dime out of the student, without providing any results as promised.
Our Higher education is big business, chaaaa ching . Even "reputable" institutions do just plain fraudulent things to demand that students take more classes to graduation. What a student is told at one time, seems to be totally different the quarter before graduation. All of sudden they now need different or more classes to finish their degrees. It is a scam that needs to be regulated.
If government really wanted to put away the for profit universities they would lower the amount of money they offer for student loans. And I mean lower it dramatically. I recently graduated from a for profit school with an AA. Every time the government increased the maximum amount they would loan to a student, the University increased its per-class cost. Every time, like clock work.
Loaning less would also bring down the cost of education across America. If you think for one minute that other schools don't do this, you're getting fooled. Government needs to decrease the amount they will loan students. This will force Universities to scale back admissions costs and will cripple the useless diploma mills in the process.
Those that rip off our Vets should gop to jail--Our crooked politicians allow these money grabbing practices to continue like Sens Kyle and McCain in Arizona protecting U of Phoenix from government regulations while our vets go unemployed because of poor education.
If the government really wanted to stop diploma mills, it could do so. This could be done at the same time education is made more accessible. I just finished a program with a for profit University. Every time the government increased the amount they will loan a student, the school increased per-class Tuition. Every time.
The government needs to reduce the amount of money they will loan students. If they do this, it cripples diploma mills. It also forces other schools to walk back high tuition costs. Everyone will need to adjust, and some people currently attending college on loans will need to be "grandfathered over" and allowed to keep their current or pending loan amounts.
Scale back loan caps. It puts the diploma mills out, saves taxpayer money and makes education more affordable for everyone by lowering the cost of admission.
While it is possible to use federal student loans and some chapters of veterans' benefits at the same time, the G.I. Bill does not offer any loan money. The Department of Education handles federal education loans and requires a second application process with the FAFSA.
Most of these schools wouldn't use multiple sources due to the amount of paperwork involved. It is easier to just target one program at a time.
Bringing jobs back to America One Veteran at a time.
A company named Workspace Communications has created the Workspace Warrior Initiative whereas companies who outsource jobs offshore can bring a small percentage back and employ military veterans and their families. These are the higher paying jobs like tech support, product support and customer retention. The positions are staffed virtually from the veteran’s home in order to employ remote and disabled veterans including caretaker family members. With all the Federal and state(s) tax credits available including training, the cost per hour is just slightly above what companies are paying offshore.
Vets2Work is asking all veterans to identify local businesses that outsource offshore and ask them to bring back a small percentage and hire military veterans. We feel that this small contribution will grow after these companies see the benefits of US veterans over offshore employees.