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Delaware Online: Delaware AG, others move to end profiteering on vets’ backs by for-profit colleges

Attorney General Beau Biden and 21 other attorneys general today urged congressional leaders to close a loophole in the Higher Education Act they say is harming veterans and their families.

Ninety percent of the funding of for-profit schools can come from public Department of Education (Title IV) funding sources, but the rest is supposed to be non-federal. But the loophole, in a 1998 law, allows for-profit colleges to secure up to 10 percent of their revenue from federal veteran education sources such as VA and DoD veterans’ programs, rather than from non-federal sources.

In their letter, the attorneys general said the recent economic downturn forced many private lenders out of the subprime student loan market, which they said for-profit colleges depended on in part to obtain their 10 percent of non-federal funds. This exodus of lenders and the veterans’ loophole created a strong incentive to recruit military members – including disabled veterans, the AGs wrote. Schools are also using the military benefits to leverage even more Title IV funds, since each one dollar they obtain from DoD or VA sources allows them to obtain an additional nine dollars in Title IV funds, the AGs said.

The Attorneys General are asking Congress to require that GI Bill and Veteran’s Assistance educational benefits be subject to the 90/10 rule, which prohibits for-profit colleges from receiving more than 90 percent of their revenue from public funding sources. The 90/10 rule was enacted to instill more accountability by for-profit colleges following congressional investigations of the industry.

“Our military servicemembers have earned the educational benefits that are meant to help them provide for their families and strengthen our workforce,” Biden said. “We must close this loophole and make sure for-profit colleges’ focus is on providing a quality education and real-world skills to our citizen soldiers, not on exploiting them to make money.”

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