Senate Bill Aims to Protect Service Members from For-Profit Predators

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A new Senate bill, introduced by Sens. Dick Durbin (D-Ill.) and Tom Harkin (D-Iowa), seeks to eliminate the financial incentives that invite for-profit college companies to prey on active-duty service members and recently returned veterans. It is an encouraging development for both students and taxpayers.

The Protecting Our Students and Taxpayers (POST) Act aims to preserve our educational commitment to those who serve our country, while preventing abuses by the for-profit industry. Under current law, for-profit colleges must derive at least 10 percent of their revenue from non-federal sources. Nearly one in six for-profit institutions run right up against that limit, receiving at least 85 percent of their revenue from federal student aid.

Moreover, a loophole that keeps aid to veterans and active-duty service members on the 10 percent side of the ledger creates an incentive for these schools to enroll as many service members as they can. For each dollar the for-profits receive in Department of Defense and GI Bill education benefits, they can receive nine in federal student aid and still comply with the 90-10 provision. In Senate testimony in November, Holly Petraeus, of the U.S. Consumer Financial Protection Bureau, shared the story of an Army wife in Kentucky who had received several calls daily from a for-profit college recruiter. “I have a real interest in folks being able to make more informed decisions than, ‘Well, they sounded military friendly and they called me 10 to 15 times per day,’” Petraeus said.

Aggressive recruitment practices aside, the main problem with for-profit colleges is, too many of the students they enroll emerge with worthless credentials or nothing at all. Abuses by the industry are well documented and have caused serious problems for service members looking to acquire new skills and knowledge as they transition to the civilian workforce.

The POST Act would broaden the definition of federal aid to include all G.I. Bill money, Department of Defense educational assistance for active-duty members, and all other federal funds. It also would reinstate the original 85 percent/15 percent split, to protect taxpayers from companies that offer low-quality programs just to collect federal-aid dollars. To prevent schools from issuing private loans to make up the difference, the bill only allows actual loan payments to be counted as revenue, not the full upfront value.

Schools that offer valuable skills and knowledge at reasonable prices will not be affected by this bill. The service members they recruit and enroll, and who are willing to invest some of their own money because they are confident about the return on that investment, will graduate, find jobs, and repay their loans. Schools that students feel are not worth their investment may struggle, but that is how the market works. Our service members are valuable human assets who have given this nation too much for us to provide them anything less than the highest quality education. The POST Act establishes reasonable safeguards to ensure they receive the education they deserve.

— Jim Davy