Military spending: new battleground on for-profit colleges.

Military spending: new battleground on for-profit colleges. Already in the crosshairs of the Obama administration, for-profitcolleges are now facing a new challenge from congressional Democrats.Some lawmakers are asking questions about the steep rise in militarytuition benefits going to high-cost proprietary schools. In 2010, the nation's top 20 for-profit colleges reaped $521million in tuition through defense and veterans benefit programs, upfrom just $66 million in 2006, says Sen. Tom Harkin, D-Iowa, chairman ofthe Senate's education committee. More than $280 million came fromveterans benefits alone, including those available under the 2008 GIBill that expanded educational benefits for those with active militaryduty. While the post-9/11 Veterans Educational Assistance Act of 2008opened up new benefits for servicemembers, their spouses and children,Harkin says, "Serious questions have emerged about the share of thebenefit pool going to for-profit schools with questionableoutcomes." The military focus opens a new front in the debate over thefor-profit sector, whose critics want to reform an industry that reliesheavily on federal student aid for revenue. The Association of PrivateSector Colleges and Universities denies that for-profit colleges aretargeting servicemembers and veterans, but it asserts that such schoolsoffer appealing features for these individuals. "Demand for private sector colleges and universities bymembers of the military has grown because of flexible and acceleratedschedules, targeted programs and a focus on educating adults forspecific careers," says APSCU President Harris Miller. Critics, however, say the sizable increase in defense dollarsflowing to for-profits adds substantial additional cost to governmentwhile providing few benefits to the students. According to Harkin, 54percent of for-profit students in 2008-09 left school without a degreewithin a year. At individual schools, withdrawal rates reach as high as84 percent. For-profit schools also have the highest student loandefault rates in the higher education industry. Recent reports from Harkin's committee have asserted that somefor-profits engage in high-pressure marketing and recruiting tactics. Hesays questionable practices also may be taking place in recruitingmilitary members. "Our military bases are by no means safe havens from thesetypes of aggressive and misleading recruitment practices," he says,citing a Bloomberg news article that found some for-profit schoolsrecruiting on a military base without permission. In another instance,Bloomberg said a recruiter was found in a barracks for wounded Marinesafter getting permission only to meet with prospective students at thebase education center. Under the new GI Bill, almost all servicemembers, including mostreservists, qualify for educational benefits that can last up to 36months at an average of $458 per credit hour. Servicemembers also canuse benefits for spouses and children. Lawmakers also are concerned that military education benefits donot count as federal aid when calculating whether forprofit collegesrely too heavily on revenue from government sources. Under the so-called90/10 rule, for-profit colleges can derive 90 percent of their revenuefrom federal sources but still must get at least 10 percent of theirfunds from outside government. Schools that fail to meet thatrequirement lose access to federal student aid programs. Under a little-known interpretation of that rule, however, tuitionbenefits for current and former military members through the GI Bill donot count as "federal aid," thereby allowing the colleges tocount it toward the 10 percent non-federal requirement. According to Harkin, the 15 publicly traded for-profit collegesidentified in a scathing Government Accountability Office study relyoverwhelmingly on federal aid, accounting for 86 percent of all revenue.Counting defense and veterans benefits as federal funding could pushmany institutions above the 90 percent threshold. APSCU has noted, however, that current enforcement mechanisms areextensive and sufficient to effectively monitor the for-profit sector. "Our schools are subject to and welcome appropriate regulatoryoversight that enables us to ensure a quality career education tomilitary personnel, veterans, and millions of students across thecountry," Miller says. "To the extent that a limited number ofproblems exist, better enforcement is the solution."