12.09.10

Durbin: Report Shows Veterans and Servicemembers Charged Highest Tuition by For-Profit Colleges, Leading to Record Student Loan Defaults

Report shows a nearly 700% increase over last four years in VA and DOD benefits to top for-profit colleges

[WASHINGTON, D.C.] – After reviewing the findings of a report showing that for-profit colleges are charging the highest tuition rates to veterans and servicemembers leading to a record number of student loan defaults, U.S. Senator Dick Durbin (D-IL) today vowed to work to increase scrutiny of for-profit colleges and universities. The report issued by the Senate Health, Education, Labor and Pensions Committee shows a nearly 700% growth over the last four years in the amount of Department of Veterans Affairs’ Post-9/11 GI Bill benefits and the Department of Defense’s Tuition Assistance Program going to for-profit colleges and universities.

 

“For-profit colleges and universities receive nearly as much Post-9/11 GI bill benefits as public colleges and universities, yet only enrolled 27% of those students. This just doesn’t add up,” said Durbin. “As these institutions continue to grow, a disproportionate amount of federal funding is flowing into them and a higher percentage of students are defaulting on their loans. It is our responsibility to ensure that this money is spent wisely and that our veterans and service members are receiving the highest quality education for their investment.”

 

In 2008, Congress passed the Post-9/11 GI Bill to provide veterans with comprehensive educational benefits on par with the World War II-era GI Bill. According to today’s report, in the first year of the Post-9/11 GI bill implementation, the VA spent comparable amounts ($697 million and $640 million respectively) on tuition for students attending public schools and students attending for-profit schools, but the VA funded 203,790 students at public schools compared to just 76,746 at for-profits.

 

Additional key findings highlighted in today’s report include:

 

  • The top five for-profit recipients of Post-9/11 GI Bill funding are: ITT Technical Institute ($79 million), Apollo / University of Phoenix ($77 million), Education Management Corporation ($61 million), Career Education Corporation ($58 million) and DeVry University ($48 million);
  • Payments to top twenty for-profit colleges increased from $66.6 million in 2006 to a projected $521.2 million in 2010, an increase of 683%;
  • Four of the five for-profit schools receiving the most Post-9/11 GI Bill funding have loan repayment rates of only 31% to 37%. To compare, student loan repayment rates are 54% at public colleges and universities and 56% at private nonprofit institutions;
  • Four of five schools receiving the most Post-9/11 GI Bill funding have at least one campus with a student loan default rate above 24% over three years. To compare, student loan default rates are 6% at public colleges and 4% at private nonprofit institutions.

 

“In the next Congress, I will work with my colleagues and the Departments of Defense and Veterans Affairs to increase oversight of for-profit colleges and address this growing problem in serving our veterans and military personnel,” Durbin added.

 

Concerned about reports of some for-profit colleges aggressively targeting military personnel and veterans, Durbin joined with Senator Jim Webb (D-VA) in August to ask the Secretaries of the Department of Veterans Affairs, Eric Shinseki, and the Department of Defense, Robert Gates, for detailed information on how veteran and military tuition assistance program funding is being spent. Specifically, they asked for data on the tuition assistance used for education at for-profit colleges and the standards in place to ensure that veterans, service members and their families are given the best possible options for higher education and that taxpayer funding is being well-spent.

 

The United States began providing education benefits to veterans and members of the military in 1944, as part of the Servicemen’s Readjustment Act, which was the origin of the GI Bill. Many of these educational opportunities are free or at reduced cost, and offer the flexibility necessary for service members subject to short-notice, worldwide deployments. In 2009, the Department of Defense spent $424 million on tuition assistance and the Department of Veterans Affairs spent $3.58 billion.