Veterans advocates argued that the loophole allowed for-profit colleges to recruit veterans for the other 10% – or more – making the federal government their sole or majority funder. Congress nixed the exception in 2021 as part of the American Rescue Plan.
Why are for-profit colleges popular?
Part of the appeal of for-profit colleges is the flexibility of their classes. They were also among the first schools to offer courses online, an accommodation key for veterans with obligations outside of their academic studies, such as work and family.
Smiley, the University of Phoenix spokeswoman, shared public statements from student veterans who spoke on behalf of the university. They listed as key draws the academic support and online courses they could take anywhere.
Regardless, others want a share of the for-profit’s earnings. The University of Arkansas system and the University of Phoenix are in conversations to create a partnership via a nonprofit in Arkansas called Transformative Education Services Inc. The University of Phoenix is owned by owned by private equity firm, Apollo Global Management, and the Vistria Group, a private investment firm.
Nate Hinkel, a University of Arkansas system spokesman, said the entity is separate from the system, but it would enter into a "partnership" with the public university system should it acquire the University of Phoenix.
An affiliation between the two could bring in $20 million for the public university system Hinkel said. Negotiations have been underway for 18 months, but he said the new revenue could bolster student scholarships, faculty and staff salaries and physical maintenance of campuses.
“In an era of stagnant funding for higher education, new resources of this magnitude could be impactful for the UA System moving forward,” Hinkel said.
Hinkel said it was, “premature for us to estimate the purchase price,” but public funds would not be used in the deal.
The affiliation would also allow the University of Phoenix to classify itself as a nonprofit university. Nonprofits receive less federal oversight than their for-profit peers.
Why is it hard to track which colleges receive GI Bill funding?
The data showing which institutions receive the most funding is publicly available but difficult to decipher. The University of Phoenix, for example, has multiple campuses that are tracked independently in the federal government’s system. The now-closed ITT Technical Institute had more than 100 campuses, all listed separately.
For-profit universities, and the companies that run them, often change names and structures, too.
Perdoceo Education Corporation used to be known as Career Education Corporation. Under that name the company ran the Sanford Brown and Le Cordon Bleu schools. The company announced it would shut down those schools in 2015. Buzzfeed reported the for-profit operator cited as a factor in the Cordon Bleu closures the new federal regulations meant to ensure graduates earn enough to repay their student loan debt.
Perdoceo whistleblower: Lies, omissions involved in recruiting students
Another top recipient was DeVry University, which had agreed in 2016 to a $100 million settlement with the FTC over deceptive advertising about how likely their graduates were to find jobs. In connection with that agreement, the Education Department in 2022 canceled the student loans owed by about 1,800 former DeVry students , the first time the department had done so with a school that was still open.
DeVry University was owned by Adtalem Global Education, but was transferred to another company by the end of 2018 . DeVry received $57.6 million in GI Bill funds under its new owners, Cogswell Capital, over the next three years. Adtalem’s main property is now Walden University, another large online for-profit college that received $12 million in GI Bill funding in the 2020-21 academic year.
Beyond college accreditation: How to choose a university that will stay open
Michael Itzkowitz is the president of the Higher Education Advisory Group and former Education Department staffer who led development of the College Scorecard, the federal government’s consumer guide to colleges.
He has previously reviewed the colleges receiving the greatest share of GI Bill funding and how much those institutions spend on advertising and instruction for Veterans Education Success.
“The data on GI Bill recipients usually isn’t included in discussion about whether federal funds are flowing to colleges institutions that are serving students well, or extremely poorly,” Itzkowitz said. “The outcomes data on whether student veterans actually succeed after they enroll at an institution are very limited and, oftentimes, non-existent.”
A separate report from the veterans advocacy group identified the University of Phoenix , Education Management Corporation, the University of Maryland, DeVry and Career Education Corporation as the top recipients of GI Bill funding from fiscal year 2009 to 2-2017.
What tools are available to veterans to choose a good school?
Veterans Affairs’s GI Bill Comparison Tool identifies which schools accept the GI Bill and how much support veterans would receive.
The Education’s Department’s College Scorecard tracks average graduation rates, student demographics and typical earnings post-graduation. It doesn’t provide veteran-specific information.
Herda’s tool tracks similar earnings and graduation outcomes but it also breaks out more specific data, such as part-time graduation rates by school. That may be helpful to nontraditional students who may have limited availability to dedicate to their studies. Veterans Education Success published a consumer guide of best practices for veterans looking for schools. Wofford, the advocacy group’s president, stressed that prospective students should be aware of promises or job guarantees.
“Be very careful picking a school,” Wofford said. “If you're getting a hard-sell, that school doesn't have your best interest at heart. If they say you have to enroll immediately, that's probably a lie.”
Chris Quintana is a reporter on the USA TODAY investigations team. Contact Chris at cquintana@usatoday.com or via Signal at 202-308-9021 .
