Obama Executive Order Protects Troops From For-Profit College Scams

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By Ashley Portero | May 1, 2012 1:10 AM EST

President Obama signed on Friday an executive order aimed at rooting out the fraud and abuse in federal educational programs designed to help members of the military, veterans and their families go to college.

Obama signed the order while surrounded by thousands of members of the Army's Third Infantry Division at Fort Stewart in Hinesville, Georgia. During the appearance -- which concluded a week of education-themed campaigning as the president courted young voters and their families during a string of visits to university campuses -- Obama told the soldiers that some for-profit schools have applied aggressive and deceptive marketing techniques to swindle service members and veterans.

"They are interested in getting money. They don't care about you. They care about the cash," Obama said, describing the for-profit recruiters whose sole focus is collecting tuition dollars without providing an adequate college education in return.

The new order aims to give service members and veterans the resources they need to make an informed choice about their educational prospects. Under the rule, schools must provide enrollees with the Consumer Financial Protection Bureau's "Know Before You Owe" financial aid information, which illustrates a breakdown of tuition fees, financial aid options, and repayment schedules.

Colleges with known histories of faulty recruitment practices will be forbidden from recruiting students on military bases. In addition, the order will purportedly strengthen the enforcement of existing rules and creates a centralized complaint system through the Department of Veterans Affairs where military students can address their concerns.

It has been well-documented that several for-profit colleges have targeted military and veteran students in order to receive benefits from federal educational benefits to service members: the Tuition Assistance program for service members on active duty and the G.I. Bill, which is primarily used for education after military service.

The for-profit college industry has reportedly exploited the Post-9/11 G.I. bill for years. Schools have a strong incentive to enroll service members and veterans because of the "90-10" rule, which states that a for-profit college must obtain at least 10 percent of its revenue from a source other than Title IV education funds -- the main source of federal student aid.  Because funds from the Tuition Assistance program and the G.I. bill are not defined as Title IV funds they count toward the 10 percent requirement, a system that makes members of the military prime targets for enrollment.

"Some institutions have recruited veterans with serious brain injuries and emotional vulnerabilities without providing academic support and counseling; encouraged service members and veterans to take out costly institutional loans rather than encouraging them to apply for Federal student loans first; engaged in misleading recruiting practices on military installations; and failed to disclose meaningful information that allows potential students to determine whether the institution has a good record of graduating service members, veterans, and their families and positioning them for success in the workforce," reads the executive order.

While speaking to troops on Friday, Obama disdainfully spoke of a college recruiter who had visited barracks at Camp Lejuene to sign up service members suffering from brain injuries who could not fully understand the implications of their actions.

"That's appalling. That's disgraceful. That should never happen in America," he said.

In a statement Sen. Tom Harkin, D-Iowa, the chairman of the Senate Committee on Health, Education, Labor and Pensions, who has been a strong critic of the for-profit industry, praised Obama's executive order.

"I went to school on the G.I. Bill and know how important these benefits are for veterans' success," he said. "I applaud President Obama's leadership in protecting this generation of veterans against fraud and abuse and ensuring they receive the same quality education that my generation did."

The for-profit college industry gets a majority of its $30 billion-plus annual revenue from federal financial aid, according to the National Center for Education Statistics, with many receiving 90 percent of their income from federal student grants and loans. However, that money does not seem to be benefiting students -- less than 30 percent of enrollees at for-profit colleges receive a bachelor's degree within six years. Moreover, while only 13 percent of U.S. students attend for-profit institutions, they make up nearly 50 percent of student loan defaults.

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