GI Bill funds flow to for-profit colleges that fail state aid standards
Jun 28, 2014
Nationally, the University of Phoenix received nearly $1 billion from the new GI Bill over the last five years.
Credit: Adithya Sambamurthy/CIR
Over the last five years, more than $600 million in college assistance for Iraq and Afghanistan veterans has been spent on California schools so substandard that they have failed to qualify for state financial aid.
As a result, the GI Bill – designed to help veterans live the American dream – is supporting for-profit companies that spend lavishly on marketing but can leave veterans with worthless degrees and few job prospects, The Center for Investigative Reporting found.
“It’s not education; I think it’s just greed,” said David Pace, a 20-year Navy veteran who used the GI Bill to obtain a business degree from the University of Phoenix’s San Diego campus.
David Pace works as a maintenance electrician at Naval Base San Diego, despite having a University of Phoenix degree paid for with GI Bill funds.
Credit: Adithya Sambamurthy/CIR
Although taxpayers spent an estimated $50,000 on Pace’s education, he has the same blue-collar job he landed right after he left the service: running electrical cable for a defense contractor.
Financial records analyzed by CIR show that California is the national epicenter of this problem, with nearly 2 out of every 3 GI Bill dollars going to for-profit colleges.
The University of Phoenix in San Diego outdistances its peers. Since 2009, the campus has received $95 million in GI Bill funds. That’s more than any brick-and-mortar campus in America, more than the entire 10-campus University of California system and all UC extension programs combined.
For the University of Phoenix, this is a sign of success.
“Veterans choose the University of Phoenix,” said Garland Williams, its vice president for military affairs. “The programs we offer are the ones that they desire and lead to careers that they want to aspire to.”
The school’s large share of GI Bill funding reflects more than just the number of veterans enrolling. The programs are expensive. An associate degree costs $395 a credit, for instance – nearly 10 times the cost at a public community college.
The University of Phoenix won’t say how many of its veterans graduate or find jobs, but the overall graduation rate at its San Diego campus is less than 15 percent, according to the U.S. Department of Education, and more than a quarter of students default on their loans within three years of leaving school.
Those figures fall short of the minimum standards set by the California Student Aid Commission, which dispenses state financial aid. The commission considers either a graduation rate lower than 30 percent or a loan default rate of more than 15.5 percent clear indicators of a substandard education.
No such restrictions govern GI Bill funds. And nearly 300 California schools that received GI Bill money either were barred from receiving state financial aid at least once in the past four years or operated without accreditation, CIR has found.
Of the $1.5 billion in GI Bill funds spent on tuition and fees in California since 2009, CIR found that more than 40 percent – $638 million – went to schools that have failed the state financial aid standard at least once in the past four years.
Four of those schools were University of Phoenix campuses, which together took in $225 million.
Among the others are massage schools, paralegal programs and auto repair academies. More than a third – GI Bill funds flow to for-profit colleges that fail state aid standards | The Center for Investigative Reporting: