Maryland first to protect vets from for-profit colleges

Gov. Larry Hogan and the Maryland General Assembly have made the state the first in the nation to pass important protections for veterans who often fall prey to deceptive marketing practices of failing for-profit colleges.

The new law closed a loophole in federal rules governing federal education benefits that incentivize for-profit colleges to target veterans like Lycretia Davis, an Army veteran from Oxon Hill, whom my nonprofit organization is helping.

Ms. Davis had her dreams of being a full-time graphic designer dashed by American InterContinental University, a for-profit online school based in Illinois. The school’s academic program was substandard, its job placement promises empty and its financial practices misleading. The school refused to confer her diploma in a dispute over a loan she says she never agreed to. She left with no job and tens of thousands of dollars in questionable debt.

Seven years later, AIU finally agreed to grant her degree after its parent company, Career Education Corporation, settled a lawsuit with 48 state attorneys general and Washington for deceiving students nationwide. The company paid nearly $500 million in student debt forgiveness, including that of Ms. Davis.

The Veterans Education Protection Act eliminates the incentive for for-profit colleges to deceive and defraud veterans. Specifically for Maryland, it closes a federal loophole that inadvertently incentivizes failing for-profit colleges to target GI Bill funds to prop up their revenues.

The federal rule requires

for-profit colleges to receive at least 10% of their tuition revenue from non-federal sources. The language is vague enough to allow these schools to count veterans’ education benefits as private revenue, thereby completely skirting the federal limit, and providing a powerful — and perverse — incentive to enroll as many veterans as possible. Fortunately, Maryland has stepped up to close this loophole, at least within its borders, creating a state “90/10 rule” that disallows Maryland-based schools from counting veterans’ education benefits as private revenue.

Veterans groups like the Maryland Military Coalition and Veterans Education Success are hailing the new law as a huge win because it stops for-profit schools from taking advantage of the federal loophole and treating veterans as nothing more than dollar signs in uniform.

For years, failing for-profit schools have exploited veterans by raking in billions of dollars in taxpayer-funded GI Bill benefits to maximize their access to federal grants and student loans. In fact, eight of the top10 recipients of post 9/11 GI Bill revenue from 2009 to 2017 were for-profit schools, taking in 20% of all post 9/11 GI Bill distributed during that time, according to the most recent data available.

What’s worse, for-profit institutions have terrible academic and job placement records. In Maryland, graduates of for-profit colleges are twice as likely as their public school counterparts to default on their student loans, and more than four times as likely as graduates of nonprofit colleges. Even though they make up only 3% of total enrollment in Maryland, for-profit colleges account for an astonishing 22% of student loan defaulters in the state. In Maryland, for-profit colleges’ graduation rate is only 37.5%, far below the graduation rates of public (68.1%) and nonprofit schools (72.4%).

Thankfully, Maryland, home to more than 400,000 veterans and a beacon for veteran advocacy, has taken a historic first step in protecting veterans from these exploitative and underperforming schools. In the final days of the 2020 legislative session, the Maryland General Assembly worked around-the-clock and unanimously passed the bipartisan Veterans Education Protection Act. Now that this unprecedented legislation has become law, Maryland residents like Ms. Davis will no longer be victimized by these predatory institutions.

Colleges should value veterans because they make great students and are an asset in the classroom, not target them with deceptive and aggressive recruiting just to use veterans’ hard-earned GI Bill money to prop up the bottom lines of failing for-profit companies and line the pockets of their wealthy shareholders. In passing the firstever 90/10 loophole closure in the country, Maryland has set an example for the rest of the nation to follow that it’s more important to protect our vets than to cater to deep-pocketed corporations.