Substandard colleges rake in millions from GI Bill

Jul 7, 2014 by

Over the past five years, more than $600 million in college assistance for veterans of the wars in Iraq and Afghanistan under the federal GI Bill has been spent on for-profit California schools that failed standards they must meet for their students to receive state financial aid.

At the same time the GI Bill is boosting those for-profit companies’ bottom line, its regulations provide no way to determine whether it is really living up to its goal of helping veterans live the American dream, the Center for Investigative Reporting found.

No one tracks whether former servicemen and women are earning their degrees or graduating with job prospects – and the for-profit colleges have successfully opposed efforts to make them provide that information.

Financial records analyzed by the Center for Investigative Reporting show that California is the national epicenter of this problem, with nearly 2 out of every 3 GI Bill dollars going to for-profit colleges where the federal government has no data on veterans’ graduation rates.

University of Phoenix

Among the biggest recipients of GI Bill money is the for-profit University of Phoenix, whose 89 campuses and online college received a total of nearly $1 billion over the last five years from 80,000 veterans’ benefits. Its San Diego campus alone has received $95 million in GI Bill funds since 2009 – more than any brick-and-mortar campus in the U.S., and more than the entire 10-campus University of California system and all UC extension programs combined.

For the University of Phoenix, this is a sign of success.

“Veterans choose the University of Phoenix,” said Garland Williams, its vice president for military affairs. “The programs we offer are the ones that they desire and lead to careers that they want to aspire to.”

The school’s large share of GI Bill funding reflects more than just the number of veterans enrolling. An associate degree there costs $395 per credit, for instance – nearly 10 times the cost at a public community college.

The University of Phoenix won’t say how many of its veterans graduate, and the California Department of Veterans Affairs, which oversees use of the GI Bill in the state, does not have access to that information even during audits of the program. Neither does the federal Department of Veterans Affairs.

The U.S. Department of Education says the overall graduation rate at the San Diego campus is less than 15 percent. The university says the federal statistic is misleading for for-profit colleges and other nontraditional universities, because many students transfer to four-year schools, drop out temporarily to work or attend classes part time.

More than a quarter of University of Phoenix students default on their loans within three years of leaving school – a figure that falls short of the minimum standard set by the California Student Aid Commission, which disburses state financial aid.

The commission considers either a loan default rate of more than 15.5 percent or a graduation rate lower than 30 percent clear indicators of a substandard education – and cuts off Cal Grants to schools that do not meet those requirements.

Substandard schools

No such restrictions govern GI Bill funds. Nearly 300 California schools that received GI Bill money either were barred from receiving state financial aid at least once in the past four years or operated without accreditation.

Of the $1.5 billion in GI Bill funds spent on tuition and fees in California since 2009, the Center for Investigative Reporting found that more than 40 percent – $638 million – went to schools that have failed the state financial aid standard at least once in the past four years.

Four of those schools were University of Phoenix campuses, which together took in $225 million. Among the others are massage schools, paralegal programs and auto repair academies.

by Education News
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via Substandard colleges rake in millions from GI Bill – SFGate.

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