07.24.14

Durbin To Defense Secretary: Failing For-Profit College Shouldn't Be Recruiting Servicemembers On-Base

WASHINGTON, D.C.] - In a letter to Defense Secretary Chuck Hagel, U.S. Senator Dick Durbin (D-IL) today said that the Department of Defense should protect servicemembers by prohibiting for-profit colleges run by Corinthian Colleges, Inc. - like WyoTech, Heald and Everest - from participating in on-base job training, education, and career events and fairs.  Durbin sent a copy of today’s letter to Education Secretary Arne Duncan.

 

Durbin’s letter follows a Marine Times report from earlier this week revealing that despite the company’s financial failure, recruiters from for-profit colleges owned by Corinthian Colleges, Inc. were actively recruiting members of the Armed Forces at education events at four military bases in California.

 

“Allowing Corinthian to continue to enroll students is highly misleading and grossly negligent of our duty to protect students and unfair to taxpayers,” wrote Durbin.  “I made these views clear with the Department of Education and hope it takes action quickly to address the problem more broadly.  In the meantime, I’m asking you to do your part to protect servicemembers by prohibiting this failing company from participating in on-base job training, education, and career events and fairs.”

 

Additionally, as Chairman of the Senate Defense Appropriations Subcommittee, Durbin included language in the Department of Defense Appropriations Act, 2015 to help put an end to the for-profit industry’s predatory marketing campaigns and aggressive recruiting of servicemembers and their families.  The bill was passed last week on a bipartisan basis by the Senate Appropriations Committee and is now awaiting action by the full Senate.

 

The Department of Defense Appropriations Act, 2015 included language – first introduced by Durbin in 2012 as part of his Protecting Our Students and Taxpayers (POST) Act – to include the Defense Department’s voluntary military education programs (Tuition Assistance for servicemembers and MyCAA for their spouses) in the federal 90/10 calculation.  The legislation also prevents these funds from being used for advertising and marketing purposes while requiring the Department of Defense to better track how the Tuition Assistance and MyCAA funding is being spent by for-profit colleges.  

 

The current federal 90/10 rule is a provision in the law that bars for-profit colleges and universities from deriving more than 90% of their revenue from the U.S. Department of Education’s federal student aid programs.  The other 10% needs to come from sources other than the federal government.  The purpose of this rule is to ensure that schools are not counting on taxpayer dollars to be their sole source of revenue.

 

Because of the way the legislation was written, veterans’ and active duty service members’ federal student aid – such as G.I. bill benefits and the Department of Defense’s tuition assistance funds – does not currently count toward the 90%.  As a result, for-profit educational institutions have been aggressively recruiting and enrolling veterans, service members and their families to their programs as a way to comply with the 90/10 rule.

 

Earlier this month, Durbin warned students that Corinthian Colleges which operates under the name “Everest College” in Illinois plans to seek buyers for its campuses located in Burr Ridge, Bedford Park, Melrose Park, Merrionette Park, North Aurora and Skokie.  As part of an agreement signed with the Department of Education, Corinthian is required to eventually send official disclosures and notifications to students, but for the time being has been allowed to continue enrolling students at a majority of their campuses.

 

After failing to provide required data to the Department of Education about its practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance, Corinthian has now agreed to sell or close its campuses across the country. This places the company’s 70,000 current students at risk, but also presents the opportunity to find better educational opportunities for these students.  The for-profit college is currently under investigation by 20 states, the Consumer Financial Protection Bureau, the U.S. Department of Justice, and the Securities and Exchange Commission.

 

Text of today’s letter is below.

 

The Honorable Chuck Hagel

Secretary

Department of Defense

1400 Defense Pentagon
Washington, DC 20301-1400

 

Dear Secretary Hagel:

 

I write to bring your attention to a troubling story recently reported in the The Marine Times entitled, “Colleges are for sale but they continue to recruit on bases.”  I ask for your help to bring an immediate end to this misleading recruitment of servicemembers by ensuring that Corinthian is not given direct access to servicemembers.

 

Corinthian Colleges, Incorporated, parent company of WyoTech, Heald, and Everest Colleges, is facing financial collapse.  Its stock is trading at mere pennies, and it faces being kicked off the NASDAQ.  After execution of an agreement with the Department of Education to sell or close its 100 or so campuses across the country, it will effectively cease to exist.  In addition, the company is under investigation by four federal agencies and 20 State Attorneys General for fraudulent and misleading practices.

 

In short, this is a company with a dismal record that is now going out of business.  Allowing Corinthian to continue to enroll students is highly misleading and grossly negligent of our duty to protect students and unfair to taxpayers.  I made these views clear with the Department of Education and hope it takes action quickly to address the problem more broadly.  In the meantime, I’m asking you to do your part to protect servicemembers by prohibiting this failing company from participating in on-base job training, education, and career events and fairs.

 

Thank you for your consideration of this request.  I look forward to continuing to work with you to protect servicemembers from predatory for-profit education companies.

 

                                                            Sincerely,

                                                            Richard J. Durbin

                                                           

 

cc: The Honorable Arne Duncan