August 25, 2011

Count GI Bill Benefits As Federal Financial Aid

By Sarah Reinheimer

After a decade of war, a generation of veterans is preparing not only to return home, but to school. Yet they face being cheated out of an educational opportunity that they rightfully earned through their blood, sweat and tears on the battlefield. Veterans today need a strong education to succeed in the tough job market, and many will turn to for-profit universities. So far, for-profits have not proven that they are teaching the skills needed to keep returning veterans competitive in the 21st century.

The original GI Bill was established after World War II to provide veterans with the education needed to spearhead 20th-century American innovation. Since the introduction of the Post-9/11 GI Bill benefits, however, many veterans are not necessarily receiving this quality education. Many for-profit schools claim to be “military friendly” but, instead of providing veterans with better choices, too many use the expanded GI Bill benefits to turn a profit while saddling veterans with tens of thousands of dollars of debt.

Veterans are especially lucrative to for-profit schools because recent GI Bill benefits are not considered federal aid. This loophole permits for-profits to evade a regulatory requirement that stipulates that no more than 90 percent of their revenue comes from federal financial aid dollars. The “90/10 rule,” established after the Korean War, served “to protect veterans from being ripped off by poor quality institutions,” a report by Sen. Tom Harkin’s office found. The concept was that if the schools were not of sufficient quality, they would be unable to meet the outside revenue requirement.

As schools reach the 90 percent ceiling, the incentives grow to recruit veterans, whose GI Bill benefits will not count as federal aid. This leads to the culture of aggressive and misleading recruitment by schools that veterans face today. To discourage the educational exploitation of veterans, GI Bill benefits should be counted as federal financial aid and applied toward the 90 percent limit. Said another way, GI Bill benefits are provided by the government and should be counted as such.

Since the passage of the Post-9/11 GI Bill, veteran enrollment at for-profit schools has skyrocketed. Although for-profits enroll only 10 percent of the overall student population, about 23 percent of student veterans attend them and 36.5 percent of GI Bill benefits are spent on them.

One of the main contributing factors is the massive amount of money and manpower for-profits actively use to recruit veterans. A recent study by the Government Accountability Office found that for-profits “encouraged fraud and engaged in deceptive and questionable marketing practices.”

For-profits at first seem to hold many advantages for veterans. Many offer an innovative online learning format that gives busy veterans flexibility in scheduling their classroom time. These schools also provide alternatives to traditional university settings that might not be a comfortable fit because of age and experience gaps between veterans and typical college students.

But the online format, while flexible, tends to isolate veterans instead of reintegrating them back into the civilian population. Moreover, the very structure of online or distance learning makes it hard for professors to provide the academic support that students need.

Even more troubling is the abysmal graduation rate of for-profit schools, which currently stands at 28 percent. In addition, students are often left with overwhelming debt after college. Although GI Bill benefits will completely cover the cost of public in-state tuition, they do not cover the difference in tuition of for-profits, which are considerably more expensive. Not only do the vast majority of for-profit schools that receive the most Post-9/11 GI Bill benefits exhibit low loan repayment rates, but for-profit students also account for nearly 50 percent of all student loan defaults — even though they account for just 10 percent of the overall student population.

To ensure that for-profit schools do not continue to recruit veterans based on their GI Bill benefits, the GI Bill benefits should be counted as federal aid and toward the 90/10 rule. Although the culture of misleading recruitment may still exist, soliciting veterans would no longer be a priority. Schools that truly are “military friendly” and can provide an education that will enable veterans to find a job will then be better able to attract veterans to their programs. For-profits may remain the best choice for some veteran students, but their choices will be better informed.

Veterans have the leadership skills and courage that will prove vital in the hypercompetitive global economy of the 21st century, and GI Bill benefits should be invested wisely to ensure that veterans get the higher education they need to augment these skills. This policy change is not only a way to uphold the sacred trust with America’s servicemembers, but also a smart economic decision. With so many veterans beginning to return home and back to school, the success of this generation and the next depends on it.

Sarah Reinheimer is a researcher at the Center for a New American Security, an independent national security and defense policy research institution based in Washington.