Predatory For-Profit Colleges Are Sucking Up A Disproportionate Amount Of Aid For Military Veterans

As ThinkProgress has documented, predatory for-profit colleges survive mainly due to the federal government, which provides about 90 percent of many schools’ revenue through the various streams of federal aid used by their students. Those students are also much more likely to default on their loans; students who attended for-profit colleges account for nearly 50 percent of loan defaults, yet make up less than 12 percent of students.

For-profit colleges have gained a reputation for tenaciously pursuing members of the military, and as CNN Money pointed out today, a disproportionate amount of higher education aid provided by the GI Bill is going to for-profit schools:

The Department of Veterans Affairs bankrolls four years of higher education for veterans who have served since September 11, 2001. The VA paid out $4.4 billion for tuition and fees in the two academic years spanning 2009 to 2011. For-profit private schools raked in 37% of those funds, but educated just 25% of veterans, according to the U.S. Senate’s Health, Education, Labor and Pensions (HELP) committee. […]

The for-profit schools are pulling in hundreds of millions of dollars in VA cash. From 2009 to 2011, the VA paid $196 million to the University of Phoenix, $175 million to ITT Tech, $128 million to DeVry University, about $50 million each to Kaplan and The Art Institutes, and $28 million to Westwood College.

Graduation rates at these schools are positively abysmal. Overall, more than three-quarters of students at for-profit colleges fail to earn a degree within six years. 15 state Attorneys General have launched an investigation into for-profit schools’ marketing to veterans.


The Education Department reported today that programs at dozens of for-profit schools failed to meet required benchmarks under new “gainful employment” regulations. The regulations state that schools lose their access to federal dollars if too many of their students and sunk under debt and can’t find good jobs. More than 40 programs at Corinthian Colleges alone failed to meet the requirements.

That for-profit schools couldn’t meet the gainful employment benchmarks is even more troublesome considering that they were significantly watered down from the original draft, after fierce lobbying by the for-profit industry.