WASHINGTON — Arkansas Attorney General Dustin McDaniel and 21 other state attorneys general urged Congress on Tuesday to tighten funding rules for for-profit colleges, which, he said, have seen returning veterans as a “rich target” for aggressive college recruiters.
In a letter to the chairmen and ranking members of education and veterans committees in the House and Senate, the attorneys general wrote that they would like Congress to change the so-called 90/10 rule, which prohibits forprofit schools from receiving more than 90 percent of revenue from Department of Education loans. The letter urged lawmakers to prohibit schools from using the GI Bill and veterans’ assistance educational funds to make up the remaining 10 percent. They would like to see that revenue come from nonfederal sources.
McDaniel said some schools see benefits promised to veterans as an easy way to “cash in” and replace dwindling private funding sources.
“Rather than have a real interest in improving the lives of those who serve our country, their interest is in collecting government money to sustain their proprietary enterprise,” McDaniel said.
Steve Gunderson, president of the Association of Private Sector Colleges and Universities, a Washingtonbased trade group, said forprofit schools offered veterans flexible scheduling and a tailored curriculum.
“Unfortunately, it appears some elected officials are more concerned with repeating regurgitated attacks against private sector colleges and universities than looking at critical facts concerning our sector of higher education,” Gunderson said. “Each state controls its licensure of schools, which allows attorneys general to take appropriate action against individual institutions as opposed to maligning an entire industry.”
McDaniel’s spokesman, Aaron Sadler, said McDaniel believed that Arkansans returning from duty abroad had been subject to “highpressure” tactics from some for-profit schools. The office has not received any formal complaints, Sadler said.
McDaniel and the other attorneys general said that an “exodus” of private lenders during the economic downturn gave schools an incentive to seek funding from veterans programs to secure funding above the 90 percent allowed for Department of Education programs.
A 2010 study of 20 forprofit schools conducted by the Senate Committee on Health, Education, Labor and Pensions found that revenue derived from military educational benefits increased from $66.6 million in 2006 to a projected $521 million in 2010, a 683 percent increase.
“While increasing their reliance on Federal dollars as a source of revenue, for-profit schools are at best spending only slightly more than half of revenue actually educating students, and in several cases are shrinking the amount spent on instruction,” Iowa Democratic Sen. Tom Harkin, chairman of the committee, wrote in his report. “Yet these same schools are reporting profit margins of 20 percent and higher to investors.”
The report found that the average operating profit among publicly-traded companies that operate for-profit colleges in 2005 was $127 million. By 2009, average profit leaped to $229 million, an increase of 81 percent.
On April 27, President Barack Obama signed an executive order that called for the creation of “Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses and Other Family Members.”
The order cited “aggressive and deceptive targeting of service members” by some schools that have focused recruitment efforts on veterans with brain injuries and emotional vulnerabilities, and gave the secretaries of Defense, Education and Veterans Affairs 90 days to come up with regulations to stop “fraudulent and unduly aggressive” recruitment.
Arkansas, Pages 9 on 05/30/2012