Obama Targets Colleges Preying On Veterans' GI Bill Benefits

For more than a year, veterans groups and Senate Democrats have warned that for-profit colleges are aggressively recruiting current and former soldiers for their generous federal tuition benefits.

President Barack Obama on Friday will sign an executive order aimed at rooting out unscrupulous sales tactics by schools seeking to capitalize on billions of dollars in higher education assistance for the military.

The president's plan is designed to provide better transparency about graduation rates and to crack down on misleading advertisements on the Internet and at military bases, according to administration officials who announced the initiative Thursday evening.

"What we won't accept is inappropriate behavior that undermines the very purpose of these educational programs," said a senior administration official who briefed reporters on the condition of anonymity.

Although administration officials said they were "not intending to single out" any particular type of college, Obama's initiative comes after consumer advocates and more than a half-dozen senators have complained in the last year about aggressive military recruiting by for-profit colleges.

Data compiled by the staff of Sen. Tom Harkin (D-Iowa) shows that veterans have enrolled at for-profit colleges in large numbers in recent years, after Congress approved generous new benefits for troops returning from Iraq and Afghanistan. Because for-profit schools are on average double the cost of public universities, a disproportionate amount of GI Bill money goes to for-profit institutions.

For-profit schools received 37 percent of GI Bill money in the 2009 and 2010 school years, yet educated only 25 percent of veterans. Public colleges enrolled 59 percent of veterans, yet took in 40 percent of the government money.

This week, the Student Veterans of America, a support group with chapters at colleges across the country, revoked memberships of more than two dozen for-profit colleges. The group said administrators at those schools had set up chapters to brand the schools as "military friendly."

Obama's executive order, which he will sign Friday at Fort Stewart in Georgia, will require that the Defense Department, the Department of Veterans Affairs and the Consumer Financial Protection Bureau ensure military members receive disclosures about college costs and graduation rates before they sign up for classes.

To keep track of which schools provide the information, the VA is asked to list schools that are in compliance on its website. In addition, the executive order will direct the Department of Defense to create specific guidelines for how college recruiters are allowed onto military bases, to prevent schools with poor track records from over-promising to veterans.

Another provision will require the VA to pursue a registered trademark of the term "GI Bill." The intent is to prevent third-party Internet marketers from creating websites intended to steer veterans toward particular colleges.

"They're using the 'GI Bill' term particularly, and people are led to believe that those (sites) have the imprimatur of the government and that those schools are sanctioned in some official way," said another senior administration official.

Harkin and Sen. Dick Durbin (D-Ill.) have argued that for-profit schools are targeting veteran and military tuition benefits because of a wrinkle in federal law. For-profit colleges receive the vast majority of their revenues from federal aid, such as student loans and Pell Grants. By law, schools can receive no more than 90 percent of revenues from federal student aid programs.

But military benefits don't count in the 90 percent category, allowing schools to consider military benefits as the non-federal 10 percent. Veterans' advocates argue that the law, as written, gives schools incentives to actively pursue military students.