A drive to protect veterans and members of the Reserve and National Guard, originating with misplaced bias against for-profit schools, will gut options for these patriots when they try to use their GI Bill to get a useful education. That’s the impression one could reach upon examining the federal government’s campaign to hobble the ability of “proprietary” for-profit schools to enroll GI Bill-wielding applicants.
For any college, university or vocational school, government dollars can make a huge — even a make-or-break — difference. Applicants bringing GI Bill benefits are, in that regard, a bonanza.
But a paternalistic Congress, unwilling to grapple with second- and third-order legislative effects — advised by those who want less competition from the private sector — is hobbling education options through murkily concocted ratios that limit how much GI Bill money the for-profits can receive. This limitation doesn’t, however, affect the more favored conventional education sector.
The 9/11-G.I. Bill of 2008 is used by more than 700,000 beneficiaries at a taxpayer cost of $10.7 billion, nearly twice the 2010 amount, showing its utility. Unlike many federal expenditures, this one, like its 1944 ancestor, truly can be regarded as in investment in America’s future.
Responding to student loan defaults, which peaked in 1992 at 22 percent, the Higher Education Amendments of 1998 mandated a ratio for student loans, requiring “that a proprietary institution of higher education have at least 10 percent of its revenues from sources that are not derived from funds provided under HEA Title IV [federal financial aid funds].” At most, 90 percent of a proprietary (for-profit) institution’s funds can come from various federal financial aid sources (including the GI Bill). At least 10 percent must come from students and other funding instruments.
According to a January 2019 Brookings Institution report, if a school or program is good enough, someone other than the federal government should be willing to pay for it — i.e., the student. Called the 90/10 rule, it sought to reduce loan defaults by enrollees in for-profit schools, which in 1992 accounted for nearly half of student loan defaults. (One may ask what other educational institutions accounted for the other half.)
This legislation would only worsen the prospects of a given GI Bill beneficiary getting the education he or she wants and has earned with service to our nation. It makes things tougher on proprietary schools, where many valuable skills for America are taught — technicians, culinary arts, aviation, commercial driving, etc.
For the school to survive, it may have to raise tuition, exacerbating the problem of unaffordable higher education costs. The GI Bill student, to attend, say, a culinary school to become a chef, potentially must take on additional loan debt because that personal debt helps “achieve” the 90/10 ratio — it falls into the 10 percent part that cannot be federal aid. That debt is money that could have come from the GI Bill. How does that help the student (or the country)?
And this assumes the student can obtain the loan.
This ratio only governs the for-profit “proprietary” education sector. Its champions would say they are protecting GI Bill beneficiaries from predatory or poor schools. That’s simply more government paternalism. The conventional not-for-profit world (which, one must assume, sees proprietary schools as competition) has no such governance.
But, with our federal government having picked winners and losers, how well are these favored institutions doing? According to the U.S. Department of Education, Oklahoma State University-Oklahoma City has a graduation rate of 6 percent, Ashford University has a graduation rate of 8 percent, and the University of Maryland-University College graduation rate is 10 percent.
Since a state university potentially can get all its money from federal sources, that moots the argument that the taxpayers shouldn’t be financing all of education; the law allows precisely that — if your institution happens to be a government-picked winner.
ROA thinks this is distorted and biased against the taxpayer and the GI Bill beneficiary, not to say an entire business sector. Any requirements associated with how much federal funding a school can receive should be linked to the achievement of certain standards — for example, performance in producing students equipped to succeed (graduate with a certain GPA, get a decent job, etc.).
Simply put, if you can show by objective metrics applied equally to all institutions, you can get all your funding from federal sources. If you can’t perform, then maybe we can discuss ratios or some other corrective measures. If some ratio is necessary (we don’t think it is), it should apply to everyone. Some institutions, such as those in the Minority Serving Institutions Program designation, may need waivers based on the program’s provisions.
But it is irresponsible to arbitrarily require one sector to compete for students hobbled by rules that seem devised more to punish the entire sector (and help its competition) than to induce performance and educate deserving students.
The ability of GI Bill beneficiaries to attend the school of their choice should not be limited by contrivances that limit the ability of the school to exist. Nor should those choices be hobbled by the necessity for the student to take on debt. All higher education institutions should be held to the same standard.
Veterans’ education benefits are not gifts from the government. These benefits are earned. They should no more be arbitrarily limited than the service rendered to our nation by those who earned them.
Jeffrey E. Phillips is executive director of ROA, dba Reserve Organization of America, open to all ranks and promoting a strong, ready reserve force. A retired U.S. Army Reserve major general, he served in the Regular Army for nearly 14 years.