Franken supporting bill targeting vet-enrollment by for-profits

Watch the vets

Still catching up on my first day back. In case you haven’t seen this, here’s news on a bill involving U.S. Sen. Al Franken that hits on for-profits’ enrollment of veterans.

Below is the Bloomberg article, followed by Franken’s press release.

For-Profit Colleges Lose Incentive to Target Vets in Bills

For-profit colleges would lose a financial incentive to enroll soldiers and veterans under U.S. Senate and House bills aimed at curbing what sponsors call aggressive marketing of subpar programs.

For-profit colleges such as Apollo Group Inc.’s University of Phoenix can get as much as 90 percent of their revenue from federal financial-aid programs. Schools solicit troops partly because their government-tuition programs are excluded from that cap.

Under bills being introduced today by two Democrats, Delaware Senator Thomas Carper and California Congresswoman Jackie Speier, that money would count toward the limit.

The law should be changed to protect taxpayers and current and former military members, according to a summary of the Senate bill.

For-profit colleges and John Kline, the Minnesota Republican who chairs the House education committee, have said such aid restrictions would reduce educational access for veterans who have been neglected by traditional schools.

“We have a responsibility to our taxpayers, our service members and our veterans to make sure that when our warriors start their new career as students, that they aren’t subjected to unfair or abusive practices while using the benefits they worked so hard to earn,” Carper, who chairs the Senate subcommittee on federal financial management, said in a statement.

Federal Cap

Eight for-profit college companies received about $626 million in veterans’ education benefits in the most recent academic year, the Senate education committee said in a November report. They include the University of Phoenix, the largest chain by enrollment, and Education Management Corp., the second- biggest.

Congress enacted the cap on federal aid to for-profit colleges as an antifraud provision, so that students — or employers who paid for their continuing education — were investing some of their own money in the tuition. Before 1998, the law had an 85 percent cap.

Congress, the Education Department, Justice Department and state attorneys general are scrutinizing the sales practices and student-loan default rates of for-profit colleges, which received almost $32 billion in federal grants and loans in the 2009-2010 school year.

Co-Sponsors

Richard Durbin of Illinois, the No. 2 Senate Democrat, and Tom Harkin, the Iowa Democrat who is chairman of the Senate education committee, sponsored a similar bill in January that would lower the total amount colleges could receive from government programs to 85 percent. Harkin is a co-sponsor of the new Senate bill. Walter B. Jones, a North Carolina Republican, is a co-sponsor of the House bill.

Apollo, based in Phoenix, fell 1.3 percent to $52.31 at 12:47 p.m. in New York.

Pittsburgh-based Education Management dropped 1.1 percent to $18.65. A Bloomberg index of 13 for- profit education companies declined 1.2 percent.

Between 150,000 and 200,000 veterans are pursuing higher education at for-profit colleges, according to Steve Gunderson, president of the Washington-based Association of Private Sector Colleges and Universities, which represents the industry.

For-profit colleges, Congress, veterans groups and the Obama administration are holding “productive conversations” that could “prevent the need for additional legislation,” Gunderson said in a statement.

Here’s the (dramatically worded) release:

Sen. Franken Introduces Bill to Protect Veterans, Service Members from Unscrupulous For-Profit Colleges

U.S. Sen. Al Franken introduced legislation – the Military and Veterans Education Protection Act (MVEP) – to close a loophole that allows for–profit colleges to take advantage of American taxpayers and exploit our nation’s service members and veterans.

“One of the greatest things we can offer veterans in return for their service is the opportunity to get an education,” said Sen. Franken. “We know there are both good and bad actors when it comes to for-profit education. It’s our job to protect our veterans from the unscrupulous actions of some for-profit colleges and ensure that at the end of the day they’re getting the quality education that they deserve.”

Sen. Franken cosponsored the legislation—which was authored by Sen. Tom Carper (D-Del.)—along with Sens. Jim Webb (D-Va.), Tom Harkin (D-Iowa), Jay Rockefeller (D-W.Va.), Tim Johnson (D-S.D.), Claire McCaskill (D-Mo.) and Kay Hagan (D-N.C.). Rep. Jackie Speier (D-Calif.) introduced a bipartisan companion bill in the House of Representatives this morning.

In order to be eligible to participate in federal student aid programs, for-profit colleges are subject to the “90/10 rule” which requires for-profit colleges to receive at least ten percent of their revenues from private sources, rather than from federal student aid, which can make up no more than ninety percent of their revenues.

Under current law, revenues a school receives from federal DOD and VA education financial aid programs – like the Tuition Assistance Program and the Post-9/11 GI Bill – are counted as private revenue. This has created an incentive for for-profit colleges to enroll as many veterans or military students as possible through unscrupulous recruitment tactics or dishonest marketing practices because they can use DOD and VA funding to meet the ten percent requirement. Once enrolled, many of our service members and veterans using these federally funded benefits don’t receive a quality education, unfairly affecting not only our service members and veterans, but also American taxpayers.

The Military and Veterans Education Protection Act changes the 90/10 formula so that a for-profit school’s revenues from DOD and VA education programs are counted as federal dollars on the 90 percent side of the 90/10 formula rather than as private dollars on the 10 percent side. The for-profit school would then have to ensure that at least 10 percent of its revenue would come from truly non-federal, non-DOD, VA or DOE funding sources.

The legislation would also amend current law so that if a school is out of compliance for two consecutive years, it would lose eligibility to accept not only new DOE dollars, but also new DOD education dollars or VA education dollars. Schools will regain their eligibility once they take a series of steps toward compliance, which is unchanged from current law.