Obama Targets Diploma Mills That Market To Vets

By Anne Gearan

WASHINGTON -- The Obama administration wants to trademark the term "GI Bill" in an effort to shield veterans and military families being swindled or misled by schools that target their federal education benefits.

President Barack Obama is signing a wide-ranging order on Friday that partially addresses growing complaints about fraudulent marketing and recruiting practices aimed at military families eligible for federal education loans under the GI Bill.

The president and first lady Michelle Obama were expected to talk to troops at the Fort Stewart Army post in Georgia, where Obama will sign an executive order mandating several new education protections for military service members.

There is little the federal government can do to shut down diploma mills, but the new protections would make it harder for post-secondary and technical schools to misrepresent themselves to military students.

The main target of the White House action is for-profit colleges and universities that market heavily to military families because of the easy availability of federal loan money under the GI Bill.

Some post-secondary schools target current and former military service members using deceptive military-themed websites that appear to be government-run or connected to the GI Bill benefit system, administration officials said.

The financial regulation overhaul that Obama signed in 2010 included the creation of a Consumer Financial Protection Bureau with specific authority to protect members of the military from predatory financial practices.

The law set up an Office of Service Member Affairs to help members of the military and their families "make better informed decisions regarding consumer financial products and services."

Bills pending in Congress, largely backed by Democrats and unlikely to become law soon, would do many of the same things Obama was ordering Friday.

Obama's order will also set a new gauge that potential students can use to calculate how much a school will really cost in tuition and fees. Schools are asked to voluntarily participate in the "Know Before You Owe" system this school year and would be required to do so next year.

Federal money, most of it through the financial aid students receive, accounts for up to 90 percent of for-profit colleges' revenue -- even more if veterans attend the school on the GI Bill.

Some schools spend a quarter or more of their revenue on recruiting, far more than traditional colleges. In some cases, recruiting expenses approach what these institutions spend on instruction.

A recent Senate report on 15 large, publicly traded for-profit education companies said they got 86 percent of their revenue from taxpayers and have spent a combined $3.7 billion annually on marketing and recruiting.

Military veterans are particularly attractive recruiting targets because they come with generous federal tuition support and also don't count toward a limit called the "90/10" rule, which requires colleges to get at least 10 percent of their revenue from nonfederal sources.

The Association of Private Sector Colleges and Universities, which represents for-profits, has called congressional attempts to add specific new protections for military families and veterans misguided at a time when the country will depend on such schools to help get millions more workers college-level training.

"Proposals like this only create more burdensome regulations affecting our ability to ensure that all Americans have access to a high-quality education," the group said.

Quality at for-profit colleges varies widely, and many are a good fit for students, particularly adult learners looking for flexible scheduling and specialized career training that often requires a certificate but not a degree.

But while comparing graduation rates can be misleading for those reasons, for-profit schools on average have lower success rates than traditional colleges on a variety of measures. The Senate report found that almost 2 million students withdrew from large for-profit colleges over a three-year period. Among those who enrolled at 10 large chains in 2008-2009, 54 percent had quit by the summer of 2010.

Meanwhile, the latest figures from the Education Department put the default rate on federal student loans for students at for-profit colleges at 15 percent, compared with 7.2 percent at public nonprofit universities and 4.6 percent at private nonprofit colleges.

The industry points out that's partly because its schools tend to serve lower-income students. But difficulties transferring credits and having credentials from for-profit colleges rewarded in the job market also play a role.



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Obama Targets Diploma Mills That Market to Vets

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khdawson

It is about time. This practice has been going on forever and the government chose to turn a blind eye under previous administrations.

April 29 2012 at 3:43 PM Report abuse rate up rate down Reply
flannery64

Bless him for this. It's long past time the government cracked down on these so-called "schools" that charge as much for tuition as the prestigious private colleges, and for what? Educations far inferior to what any halfway decent community college can offer. Unfortunately, they market themselves so slickly and offer "practical" degree programs in courses not found in many state schools, e.g., crime scene forensics, chef training, even animation and fashion design. People needing jobs, including vets, are easily sucked in, as are immigrants, who aren't familiar enough with the US educaiton system to know what's happening. They take their money, promise jobs, and come through with little more than sparsely attended classes taught by instructors without the credentials to work in real colleges.

Students who have to take out loans to go to these places have the highest default records in the nation, because often as not, they can't get jobs, even though the promise of easy job access is what originally lured them in. It's a disgrace! Kudos to Obama. Just alerting the public to how these schools operate is a public service.

April 29 2012 at 3:23 PM Report abuse rate up rate down Reply
G'DUB

A little pandering here, but mostly overall, is a good pull for Obama.

April 29 2012 at 2:44 PM Report abuse rate up rate down Reply
thefacts22

There is an strong academic movement in Europe to eleminate many worhtless degrees and subjects,,in favor of practical science studies.As a business man and business executive i had the opportunity to interview some graduates,who had no clue that their degree was useless

April 29 2012 at 2:04 PM Report abuse rate up rate down Reply
Lightning F2A

As a hiring manager I can honestly tell you that I regard degrees from both DeVry and University of Phoenix as worthless. Any applications I get from candidates sporting those qualifications go straight in the trash.

Why? Simple, because they hand out degrees to people who can barely write their own name. Pay them the money, turn in some shoddy papers, and walk away with a degree. No thanks.

April 29 2012 at 1:50 PM Report abuse +1 rate up rate down Reply
1 reply to Lightning F2A's comment
thefacts22

I agree

April 29 2012 at 2:05 PM Report abuse rate up rate down Reply
turrytwo

Why is anyone going to college these days ?? I have many friends with college grad kids that can't find a job and they'll never leave home. Why rack up a student loan that they have no intention of paying back and Obama will have taxpayers pay them off.

April 29 2012 at 1:32 PM Report abuse +1 rate up rate down Reply
1 reply to turrytwo's comment
thefacts22

They probably had worthless degrees

April 29 2012 at 2:06 PM Report abuse rate up rate down Reply
Welcome MSGT

All he wants is the military vote on this one. this order means nothing now or never will. He is knocking off one group after another to get their votes.

1.. Women---got them (bought)
2.Hispanics----got them (bought)
3.gays---------got them (bought)
4. Blacks already had them (lied to them)
5. Jews working on them (lied and is lying to them)
6. young people------got them (lied to them)

April 29 2012 at 1:28 PM Report abuse +2 rate up rate down Reply
1 reply to Welcome MSGT's comment
thefacts22

He is doing what EVERY socialist have done before,he is now desperate "buying" votes and creating more debt.Socialists do not ever think in paying back,

April 29 2012 at 2:10 PM Report abuse +1 rate up rate down Reply
natalie

personally i'm glad to hear he is going after diploma mills, i hope he goes after all junk like that

April 29 2012 at 12:56 PM Report abuse rate up rate down Reply
invmartyc

The GOP feels these are jsut people with a great business model. Get people signed up, get them to agree to a costly government loan, get all of that money, make sure most of the people that sign up fail and drop out. Then they can resell their seats.

Of course, anyone who actually "graduates" find out that the school's rating is so bad any HR with any smarts will not hire them. A diploma in paper only. What a racket!

April 29 2012 at 12:08 PM Report abuse +1 rate up rate down Reply
petpetdonna

Obama is not a leader. Come November he is gone.

April 29 2012 at 11:34 AM Report abuse +3 rate up rate down Reply
3 replies to petpetdonna's comment

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