Durbin leads charge to close G.I. Bill loophole for for-profit colleges

WASHINGTON - When it comes to enrolling veterans and their families, there is only upside for for-profit colleges. Men and women who serve in the military receive federal education funding that has become a stable source of revenue for many of the schools. And that money is exempt from a key federal rule that governs the way for-profit colleges are funded.

But a group of Senate Democrats are ready to put an end to that. Sens. Dick Durbin, D-Ill., Tom Carper, D-Del., and Richard Blumenthal, D-Conn., introduced legislation Wednesday to close a loophole in the so-called 90/10 rule, which prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. Money from the G.I. Bill, which provides veterans and their families with funding for college, does not count toward that threshold despite being federal aid.

As a result, lawmakers and consumer advocates say for-profit colleges aggressively recruit members of the military. About 40 percent of G.I. Bill tuition benefits have gone to for-profit schools in the past five years. Corinthian Colleges, the for-profit giant that filed for bankruptcy last month amid allegations of predatory lending and lying to the government about its programs, received $186 million in military tuition funding.

"While not every for-profit college is a bad actor, one veteran mistreated is one veteran too many," Carper said, in a statement. "We need to use common sense here. It doesn't make sense for taxpayers to send veterans to for-profit schools that can be 100 percent subsidized using taxpayers' dollars."

Congress first capped the amount of taxpayer dollars for-profit colleges could receive at 85 percent in 1992 to crack down on fly-by-night schools making money from student aid programs. The government figured a for-profit school with quality programs should have no trouble deriving at least 15 percent of its revenue from students willing to put up their own money. The for-profit industry fought tirelessly against the rule, which was relaxed six years later as the cap was raised to 90 percent, and military education benefits were exempted.

"These for-profit colleges charge twice as much as regular schools. Students give their Pell Grants, their G.I. Bill benefits and student loans to these schools … more than 90 percent of their revenue comes right out of the federal treasury," Durbin, who plans to introduce separate legislation to reinstitute the 85/15 rule, said in a news conference this week. "It's a little hard to defend."

Industry groups take issue with the senator's characterization of for-profit colleges and argue that veterans choose their schools because of the service they provide.

"The only effect that the proposed changes will have will be limiting access to education for the students who need it most," said Noah Black of the Association of Private Sector Colleges and Universities, which represents for-profit schools.

The aggressive recruitment practices of for-profit colleges came to light in a 2012 Senate investigation, which found evidence of schools deploying teams at veterans hospitals and wounded warrior centers to enroll students. Investigators said recruiters misled or lied to service members about their military benefits covering the full cost of tuition.

Despite the widespread attention the Senate investigation received, it failed to galvanize Congress to stop abuses in the for-profit industry. A series of bills to close the funding loophole since 2012 have failed to gain enough support to pass, and there is little indication that this latest attempt will have greater success. There is not a single Republican among the bill's 21 co-sponsors.