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For-Profits and Military Money

March 2, 2011

WASHINGTON — The Defense Department should increase its oversight of institutions receiving Tuition Assistance Program funds to prevent potential waste and abuse, a new Government Accountability Office report finds.

The tuition program provides money to active duty military personnel who want to attend college while serving, either via distance education or at installations on military bases. In the 2009 fiscal year, more than 376,000 servicemen and women participated in the program, receiving more than $517 million in tuition assistance. In recent months, Democratic senators have spotlighted allegations that several for-profit colleges are abusing this program, especially in how they recruit military personnel.

Released Tuesday, in advance of today’s Senate hearing entitled “Preventing Abuse of the Military's Tuition Assistance Program,” the GAO report concludes that the Defense Department does not focus its oversight efforts on institutions at which there may be an increased risk for problems, has little accountability in its education quality review process, and lacks a centralized system to track complaints.

Additionally, the report notes that the Defense Department reviewed academic courses and services provided only by institutions offering traditional classroom instruction at military installations, and did not review distance education courses, which accounted for 71 percent of courses taken by beneficiaries in fiscal 2009.

Without more oversight, the GAO report argues, institutions receiving tuition assistance funds may engage in “improper or questionable marketing practices.” Though Defense Department officials interviewed for the report noted they don’t keep official records of complaints, they “recalled that most of the instances of a school engaging in improper or questionable marketing practices” have involved for-profit institutions.

For example, Pentagon officials revealed to GAO investigators that one unnamed for-profit institution was charging higher tuition rates to servicemen and women than to civilians and also offering servicemen and women $100 gas cards upon course completion. They also noted that a representative of another unnamed for-profit institution repeatedly called and e-mailed a service member “during day and evening hours” after he chose not to attend that institution.

In closing, the GAO report offers recommendations to improve the Defense Department’s oversight of the tuition program, including mandating that institutions respond to recommendations made by third-party reviews of their programs, creating a centralized process to track complaints against institutions, and requiring state authorization for all institutions.

Legislators Respond to Report

"Because of the high costs, high withdrawal rates, and high default rates among the general student population, combined with troubling stories I have heard from veterans, I am deeply concerned that there is inadequate oversight of our nearly $30 billion in federal aid to for-profit schools, and this report by the GAO confirms my concerns,” Senator Tom Harkin, Iowa Democrat and chairman of the Senate Committee on Health, Education, Labor and Pensions, said in a statement about the report.

Sen. Harkin will testify about his investigation of for-profit institutions at today's hearing, which is hosted by Senator Tom Carper, a Delaware Democrat and chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security.

“Over the past year, several reports have indicated that some institutions have taken advantage of our military personnel and have failed to deliver the quality of education they promised to our men and women in uniform,” wrote Senator Carper in a statement about the GAO report and today’s hearing. “The accounts of abuse range from deceptive recruitment practices, to schools' hollow promises about transferability of credits, to students becoming saddled with unnecessary debt. This is troubling news, and it raises some serious questions about the Department of Defense's ability to prevent against schools' abuse of the Tuition Assistance Program. We demand so much of our men and women in uniform. We must also demand more from our schools and get better results from our government."

For-Profit Advocates Question GAO

Though legislators are focusing their attention on the current GAO report, many for-profit college advocates still have not gotten over the GAO’s last report on for-profit colleges, which they allege manipulated data and misstated facts.

Penny Lee, managing director of the Coalition for Educational Success, a career college advocacy group, said the GAO’s “reputation has been tarnished” as a result of its last report, which the agency later had to revise. (Harkin defended the GAO’s revisions last December in an Inside Higher Ed essay.) Until the GAO “fully addresses” the issues in last year's report, Lee said she and her colleagues will remain dubious of its further reports and recommendations. The GAO announced Wednesday that it was restructuring and renaming the team responsible for the report on for-profit institutions.

Harris Miller, president of the Association of Private Sector College and Universities, which represents for-profit institutions, seconded Lee’s demand that the GAO retract its prior report. Still, he said he would not hold what he saw as the last report’s errors against this GAO report, which he said he thought was “up to [the agency's historical] standards.”

“Still, I don’t agree with everything in it,” said Miller, noting that he would have preferred that the report leave out the specific examples of abuses perpetrated by for-profit institutions, which he called “hearsay.” He also said he took issue with the recommendation that all institutions must be state approved to be TAP-eligible, a tactic the Education Department is now using for Pell Grant eligibility. APSCU is currently suing to stop this Education Department requirement.

Representatives from some specific for-profit institutions were much more accepting of the GAO report.

Jim Sweizer, vice president of military programs at American Military University, said he appreciates the oversight suggested by the GAO report.

“We do not engage in any of those [questionable] practices here at [the American Public University System],” Sweizer said. “It would be hypocritical of me to be against them my whole military education career and then come here and suddenly be for them.… We feel we’re in full compliance. The extra scrutiny doesn’t bother us at all. We welcome it. We’ll do whatever it takes.”

Government Seeks New Quality Monitor

The GAO report also noted that the four-year, $3.7 million contract that the Pentagon had with the American Council on Education to monitor course quality was not renewed after the end of last year, and thus no review will be conducted until later this year — a lapse that concerns legislators like Carper. The Defense Department is seeking a new contractor and hopes to resume reviews by Oct. 1, 2011.

Jim Selbe, assistant vice president for lifelong learning at ACE, said the criticism levied in the GAO report about the monitoring of course quality had more to do with the charge given to ACE in the Defense Department contract than with ACE’s work itself. He noted that the contract would need to be revised so that more TAP-eligible institutions could be reviewed. Only when a new contract was available, detailing what work would need to be done, would ACE consider whether to seek the contract again, Selbe said.

 

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