Tuesday, November 9, 2010

For-Profit Colleges Are Now Preying on Benefit-Rich Veterans

Let us thank Businessweek magazine for its diligence in keeping track of the predatory tactics practiced by for-profit colleges. They point out, here, that veterans provide a lucrative source of government funds which, because of loophole in a 1992 law, does not have to be counted as government funding. This law limits to 90% the fraction of their revenue that can come from government sources. Tuition paid under the GI Bill can be tallied as non-government funds.

The article focuses on Kaplan University which is owned by the Washington Post. It derives 87% of its revenue from government sources, not counting veterans. The author uses a few good anecdotes to make the point.
“Keith Melvin, a disabled and decorated Iraq War veteran, wanted to go to a traditional college until a recruiter for the online, for-profit Kaplan University began courting him. She assured him, he said, that he could trust Kaplan because it's owned by Washington Post Co., and because the Post's board boasts such luminaries as Warren Buffett and Melinda Gates. ‘I was more familiar with Jimmy Buffett than I was with Warren Buffett,’ Melvin says.....After learning the difference between the Sage of Omaha and the Sage of Margaritaville, Melvin enrolled at Kaplan last year. Invoking Buffett and Gates is one of many ways Kaplan attracts veterans—and the public funds used to pay their tuition.”

“Veterans often don't complete degrees or land lucrative jobs after attending for-profit schools. At Kaplan University, only 30 percent of two-year students and 33 percent of four-year students graduate.”

“Iraq vet Scot Reynolds, who earned a bachelor's degree in management from Kaplan University in 2009, now works as a telemarketer for $8 an hour plus commission—less than he made before he graduated. ‘My income has drastically dropped," he says. "Kaplan was extremely limited with help in finding work’."
This has become an oft-told tale of people being preyed upon and misused. This is about the fifth time we have had to discuss some new outrage. The fact that the Washington Post is an accessory in these activities is disgraceful. If this is the only way that paper can turn a profit, then let it suffer a deserved death. And good riddance!

The author points out that the amount of funds available to veterans is increasing dramatically.
“Federal spending on veterans' education will more than double this year, to $9.6 billion from $4.2 billion, says the U.S. Veterans Affairs Dept., largely because of a more generous GI Bill that took effect in August 2009. It pays veterans' tuition up to the level of their state's most expensive public university.”
Not surprisingly, there are many players in this game. From the chart below one sees that eight of the top ten colleges with students receiving veteran’s benefits were of the for-profit variety. The University of Phoenix was by far the most active, followed by American Public University, with Kaplan in third place.

There are over 1.2 million veterans eligible for the enhanced benefits from the latest GI Bill, providing a potentially huge source of income.
“About 11,000 Kaplan University students, or 15 percent of its enrollment, are veterans, active-duty service members, or military spouses, up from 8,500 a year ago.”
And one last quote from the article to bring home the message.
"’These schools are after the monetary gain of a healthy benefits package, not necessarily what's in the best interest of students,’ says Donald D. Overton Jr., executive director of Veterans of Modern Warfare, a service group with 5,000 post-1990 veterans as members.”

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