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For-Profit Colleges Lead Top Recipients of GI Bill Funds

By Janet Lorin
July 30, 2014 2:00 PM EDT 5 Comments

For-profit colleges accounted for eight of the top 10 recipients of education benefits for U.S. military veterans in the 2012-2013 academic year, according to a Senate report.

About $1.7 billion of Post-9/11 GI Bill funds went to for-profit schools that year, more than double the $640 million for 2009-2010, according to the report released today by Senator Tom Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee.

Over the past four years, the top eight for-profit recipients received $2.9 billion, according to the report. The for-profit college industry is starting to show strains after years of scrutiny from federal and state agencies and the Obama administration over recruitment practices and student borrowing.

“While the Post-9/11 GI Bill was designed to expand educational opportunities for our veterans and service members, I fear that it is expanding the coffers of the big corporations running these schools rather than preparing our service members and veterans for post-military employment,” Harkin, Democrat of Iowa, said in a statement.

The so-called “90/10 rule” limits a for-profit college to getting no more than 90 percent of its revenue from the government. Veterans’ and military tuition programs are excluded from the cap, and the colleges have aggressively recruited from the military.

Top Three

The top recipient in 2012-2013 was Apollo Education Group Inc. (APOL)’s University of Phoenix with $272 million, followed by Pittsburgh-based Education Management Corp. at $163 million and ITT Educational Services Inc. of Carmel, Indiana, with $161 million.

Corinthian Colleges Inc., which said this month that it would sell or shut down its 107 campuses after the government limited access to student aid, received $63 million that year, according to the report. Corinthian, based in Santa Ana, California, serves about 72,000 students and is facing allegations in multiple states of falsifying job placement and marketing data.

The University of Maryland system was the largest recipient of Post 9/11 GI Bill funding among public institutions in 2012-2013 with $50 million.

Three Democratic members of Congress plan to introduce a bill that would protect students at for-profit colleges, including prohibiting schools from using federal aid revenue for marketing.

The bill would also change the ratio for the “90/10” rule to schools deriving at least 15 percent of revenue from non-federal student aid, and ensure that military and veterans’ education benefits are included in that calculation, according to a statement released today from the office of California Congressman Mark Takano.

To contact the reporter on this story: Janet Lorin in New York at jlorin@bloomberg.net

To contact the editors responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net Chris Staiti

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