In light of the ongoing legal troubles and financial tribulations that face Corinthian Colleges Inc., the California State Approving Agency for Veteran Education (CSAAVE) sent a “Notice of Suspension” to Heald College, Wyotech, and Everest College in California, all of which are owned and operated by Corinthian.
The notice, issued on Tuesday, prohibits the future enrollment or reenrollment of veterans utilizing their GI Bill education benefits to pay for school.
Reconsidering For-Profit Education
Initiated by CSAAVE as a result of Corinthian’s announcement that it was intending to sell or close some of its schools last week, the notice was spearheaded by Keith Boylan, CalVet deputy secretary for veteran services:
“Corinthian Colleges and their schools have not been able to demonstrate to us that they have the financial resources to ensure the veterans enrolled in their programs will receive the education and training they are seeking.”
The suspension was, however, only finalized after Monday’s announcement that the for-profit education corporation would be selling, rather than closing, all of its Heald schools, a group of twelve campuses that offer associate’s degrees.
The sale will be the first part of the company’s agreement with the U.S. Department of Education to phase out or sell all of its 107 colleges in North America. Details of the plan were to be released on Tuesday, but the negotiating parties failed to reach an agreement.
California has been particularly aggressive in its interactions with Corinthian, whose revenue for fiscal 2013 totaled $1.60 billion, down from a high of $1.9 billion in 2011. California attorney general Kama Harris sued Corinthian last year for misleading prospective students and lying about the benefits of Corinthian degrees, even as the company garnered legal attention on the national stage and faced federal prosecution on related charges.
Corporations Reaping a Profit From Federal Funds
The promises of for-profit institutions of higher education are deceiving for low-income students who receive federal grants and take on additional student loan debt.
This most recent suspension draws attention to a population that also is particularly vulnerable to the propaganda of these corporations: veterans.
On a national level, the for-profit higher education industry drew $32 billion in revenue during the 2010–11 academic year alone. Of the annual average of $1.4 billion that went to Corinthian over the past few years, just under half—more than $600 million—came through the federal GI Bill, which provided education benefits to Iraq and Afghanistan veterans between 2009 and 2014. This means nearly $2 out of every $3 that come through the GI Bill are going toward for-profit colleges.
Nationally, private for-profit corporations received over $1 billion in GI Bill payments, compared to public schools ($871 million) and private nonprofits ($560 billion) in 2013.
And, yet, for-profit schools served only 57 percent of the total number of veterans enrolled, translating into an average payment more than twice as much at for-profit institutions than at public ones.
For-profit institutions also enrolled a disproportionate number of low-income veterans, and had both lower retention rates and higher student loan default rates than public or nonprofit schools.
In California, the differences are even more extreme.
An associate’s degree at for-profit University of Phoenix, a leading for-profit school run by Corinthian competitor Apollo Education Group, costs $395 per credit, almost ten times the price tag for the same degree at a nearby California community college.
Resources and students are being funneled away from a suitable public system that has an average graduation rate approximately six times greater and a loan default rate less than one-fifth that of Phoenix. These institutions are charging more and doing less for California veterans, and veterans nationwide.
Moreover, among the 2010–11 top ten recipients of post-9/11 GI Bill benefits, eight are for-profit institutions. In this award year, seventh-ranking Corinthian received $39 million. Apollo, which also targets veterans, gained a windfall of $133 million in taxpayer funded grants.
These for-profit institutions are predatory in nature. Fully 43 percent of Apollo’s 2010 spending and 34 percent of Corinthian’s spending in that year went toward profits and marketing.
For years, journalists have been reporting on the marketing practices of for-profit educational institutions, like Corinthian, toward veterans. It is high time those on the national level follow California’s lead and protect those who protect us.
The Dominance of For-Profit Education
In part, the tremendous flow of funds from veterans to for-profit institutions can be tracked to the 90/10 Rule, under which for-profit colleges must receive at least 10 percent of their revenue from sources other than the Department of Education to protect their flow of federal student aid.
Illogically, revenue streams that flow from GI Bill benefits are excluded from this 90/10 Rule and, therefore, even if these for-profit institutions have maxed out on public funds from the Department of Education, they can still receive them from the Department of Veterans Affairs.
For corporations that feed on public money, the generous benefits given to the veteran must seem too good to be true.
On March 2013, Senators Tom Harkin and Dick Durbin introduced the Protecting Financial Aid for Students and Taxpayers (POST) Act, which would eliminate this loophole. The bill was referred the Senate’s Health, Education, Labor, and Pensions Committee—and rests there to this day.
The bill has a depressingly low 5 percent chance of getting past the committee, and only a 1 percent chance of being enacted, according to govtrack.us.
It is time we reconsider not only this federal legislation, but the larger role of for-profit institutions in educating the veteran population, a group that has surely earned the best our nation can provide.
California’s recent suspension of funds should encourage us to rethink the current role of these corporations and to ask ourselves whether our veterans do not deserve more.