WASHINGTON — For-profit colleges are reaping hundreds of millions of dollars in federal higher education aid for military personnel and veterans, a Democratic senator reported Thursday.
The money represents a fast-growing source of revenue for an industry that has come under government scrutiny because of allegations that its students are often overloaded with debt and fail to obtain jobs whose salaries justify the tuition costs. The colleges reject those charges.
Sen. Tom Harkin, D-Iowa, chairman of the Committee on Health, Education, Labor and Pensions, who issued the report, said the funding trend "raises serious questions about the share of military educational benefits that go to for-profit schools that have very poor outcomes."
Eighteen education companies Harkin's staff examined were on track to receive about $175 million in Defense Department aid in 2010, up from $40 million in 2006. The companies were projected to receive $286 million this year through the Department of Veterans Affairs, Harkin reported, up from $26 million in 2006.
Republicans, who have often defended the industry, said the report was incomplete.
"There can be bad actors in the for-profit sector, and we should take steps to stop them," said Jessica Straus, a spokeswoman for Sen. Mike Enzi, R-Wyo. "However, low graduation rates, rapidly increasing tuition and high loan default rates are problems throughout higher education, not just in the for-profit sector."
Retired Army Col. Garland Williams, an associate regional vice president with the for-profit University of Phoenix, said Harkin drew the wrong conclusions. He said that if the university, owned by the Apollo Group, did not offer "a high-quality education, I wouldn't be doing it."
The Education Department is considering proposed regulations to force for-profit colleges to show that their graduates obtain "gainful employment." Those that fail to meet proposed standards would face a cutoff of some federal aid. The industry is fighting the proposal.
On Thursday, a military veteran named Roger Betancourt joined Harkin on a conference call. Betancourt said a Kaplan University recruiter hounded him to enroll even though he was unsure about his eligibility for veterans aid. Betancourt said he wound up with $2,300 in debt and no benefits. "It's been an overall bad experience," he said.
Kaplan spokesman Mark Harrad said Betancourt had "apparently used up his veterans education benefits before he applied to Kaplan University. He indicated otherwise on his VA application in our files, and we proceeded to enroll him accordingly."