Armed Service Members – Don’t They Take Enough Risk Already??

Opposition Commander in Misurata, Libya GI’s take enough risk in their lives, what with IEDs, suicide bombers and the like.  The news today was that for-profit schools are targeting them as well.

The Department of Veterans Affairs reported disbursing $4.4 billion in academic benefits for GIs in the 2010-2011 academic year.  Of that amount, more than $1 billion went to eight for-profit schools.  That’s right, just eight!

I didn’t realize that funds disbursed under the Tuition Assistance Program (for active duty service members) and the GI Bill (for veterans) didn’t count for the “90-10 rule.”  This rule prevents any for-profit institution from receiving more than 90% of its revenues from federally guaranteed funds.  In other words, a school has to get some revenue that is not federally guaranteed, or it can’t get any.  The rule was intended to ensure that schools shared some risk in their revenue streams.   I’ve always thought that 10% was an absurdly small amount of risk to share; you show me another business proposition where all but 10% of your revenue stream is guaranteed, and I’ll be the first to jump in!  Leaving aside the amount of the number, the 90-10 rule was intended as one means of keeping for-profit schools honest.

That’s why the exemption of the military from the 90-10 rule is a big deal.  The more service members the for-profit schools can sign up, the less their 10% is really at risk at all.  Put another way, every service member the schools can sign up means one more student they can sign up without taking any risk at all.  So, service members start looking mighty good as recruiting targets.  Tom Harkin, the Iowa Democrat who has been leading the charge against deceptive for-profit schools, put the point well:  “It’s possible that 100 percent of a college’s or university’s revenue can come from the taxpayers.  No skin in the game. That’s not a good situation for the taxpayers.”  Not a good situation for the service members either.

Holly Petraeus, the wife of former General and current CIA Director David Petraeus, lamented this situation in a New York Times opinion piece here.  It’s time to take action if you are a service member and a for-profit school promised you educational benefits you didn’t get.  Contact an experienced attorney (such as me), and see if you have a claim.  Otherwise, you’re going to pay for your education two ways:  first, with your student loan bill; and second, as a taxpayer.  That’s not right.
Creative Commons License photo credit: ssoosay

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