Skip to main content
Visit the Midday Edition homepage

GI Bill Funds Flow To For-Profit Colleges That Fail State Aid Standards

June 30, 2014 1:18 p.m.

GI Bill Funds Flow To For-Profit Colleges That Fail State Aid Standards

Aaron Glantz, reporter, Center for Investigative Reporting

Robert Muth, law professor and supervising attorney for Veterans Legal Clinic, University of San Diego

Mark Brenner, Apollo Group, University of Phoenix parent company

Related Story: GI Bill Funds Flow To For-Profit Colleges That Fail State Aid Standards


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

MAUREEN CAVANAUGH: The Center for Investigative Reporting has focused on an issue that could affect the futures of many veterans in San Diego and across the country. It is about the education benefits included in the G.I. Bill, and how they are being used or abused by for-profit universities. The San Diego campus of the University of Phoenix features prominently in this investigative report, as does San Diego-based bridge point education, parent company of the online Ashford University. Recently I spoke with Aaron Glantz with the Center for Investigative Reporting, and Robert Muth, Law Professor and Supervising Attorney for Veterans Legal Clinic University of San Diego. Here's that interview:


MAUREEN CAVANAUGH: Aaron, how did the story come to your attention? Did you hear complaints from veterans?

AARON GLANTZ: It has been a life issue ever since this new generous G.I. Bill went into effect in 2009 after being signed by President Bush in 2008, that people would say that a large portion of these G.I. Bill dollars designed to help veterans live the American dream after they served their country, were being taken by for-profit schools that provided minimal education, but took a lot of taxpayer money. We at the Center for Investigative Reporting tried to find an answer for this question scientifically, to find out if this was indeed happening. What we decided to do was to look at two factors, the first was that if the school had been banned by the state of California from receiving financial aid from the state from the Cal Grant program and still getting money from the G.I. bill, that was probably a bad thing. Also, if the store had no academic accreditation at all, that was probably a bad thing as well. There are probably 300 schools in California that failed these standards that still got G.I. Bill money. The biggest school that failed these standards was the University of Phoenix in San Diego, which has received $95 million in G.I. Bill money over the last five years, more than the entire ten Is University of California system, and all of its extension programs. The University Phoenix's overall graduation rate as reported by the Department of Education is under 15%.

MAUREEN CAVANAUGH: You found that a great deal of G.I. Bill money, $600 million, is going to schools that don't meet state financial aid requirements, and some of those schools actually lack accreditation. You point to the University of Phoenix to meeting at least one of those criteria. Which criteria and how often?

AARON GLANTZ: The University of Phoenix, all of their campuses in California have failed the state financial aid standards, because the graduation rate is below 30% and the default rate, the chance that the student will default on loans is about 15.5%. At the San Diego Is the overall graduation rate is under 15% and the default rate is 26%. That is why the state of California has banned the school from getting state financial aid, but we found that the San Diego campus of the University of Phoenix alone had received $95 million in G.I. Bill money over the last five years.

MAUREEN CAVANAUGH: Where did the graduation statistics come from? Do they come from the school?

AARON GLANTZ: They come from the federal Department of Education, which is collecting this information for schools around the country.

MAUREEN CAVANAUGH: Do we know how many veterans are getting jobs after attending the schools? Do we have any information about that?

AARON GLANTZ: No, we do not. The schools do not have to provide this information. It is not required by law. There was a bill that would have required schools to report whether veterans were graduating, because the graduating rate that were talking about before was the overall graduation rate. There are measures to require that these schools report that veterans graduate, and whether or not veterans find jobs. Those provisions died in the state assembly after opposition from the University of Phoenix and other for-profit schools.

MAUREEN CAVANAUGH: Bob, you are the supervising attorney for the Veteran's Legal Clinic at the University of San Diego. How does the G.I. Bill actually work for veterans? Do vets apply and the VA just releases funds for the school? Do they do any vetting at all?

ROBERT MUTH: Not exactly. What happens is, a veteran will rate a certain percentage of the G.I. Bill, depending on how much service they had over the course of time they had on active duty. Assuming that they completed their time with an honorable discharge, they would be rated certain educational benefits. What the veteran will do then, they will select the institution that they want to proceed with their continuing education. That school will be certified by a state certifying agency, and here through the Department of veteran affairs for the state of California. Once a school is approved by CalVets, the student can then utilize VA benefits at that school.

MAUREEN CAVANAUGH: What is each veterans cap for education funding?

ROBERT MUTH: That is a good question. It differs depending upon where the veteran is located. The cap is going to be tied to the most expensive public school in that state. There is also a housing allowance that goes along with it. You could have a veteran in a state with a less expensive public school, receiving nominally less money, but in reality they are getting the same state education value.

MAUREEN CAVANAUGH: Is there an overall cap? In other words, a veteran can have this much money and no more?

ROBERT MUTH: It will be up to thirty-six months of the G.I. bill payments, and that will be tied to how expensive that would be at the most expensive public school in the state.

MAUREEN CAVANAUGH: Okay, so a veteran could go to a UC campus.

ROBERT MUTH: Sure, Berkeley, UCLA, here at UCSD.

MAUREEN CAVANAUGH: Aaron, your report was also critical in part about how much for-profit universities are charging for education. Tell us a little bit about that.

AARON GLANTZ: The new G.I. Bill will pay the full cost of education at any public school at UCLA, UCSD, San Diego State, community college, and also pay for private school up to $19,000 a year. So, when we interviewed the University of Phoenix and asked them do you think you are worth what you charge, because indeed the University of Phoenix charges $395 a credit for an Associates degree, whereas community colleges are charging forty-six dollars a credit. The University of Phoenix said veterans are choosing us, they are making that decision, they are walking with their feet. We asked the question, well, are we making good investments as taxpayers, paying nearly 10 times as much for an education that may not be as good, when you look at the graduation rate, and the loan default rate that the school has.

MAUREEN CAVANAUGH: Joining us now is Mark Brenner, Chief of Staff at the Apollo Education Group, a Parent Group of University of Phoenix. I appreciate you coming on the show, thank you. Why does the San Diego campus have such a low graduation rate?

MARK BRENNER: Thank you for the question and thank you to the other guests on the show. I find it interesting that we are using what Mister Glantz knows as completely flawed data in referring to the graduation rate. He is using iFed's data, which the Department of Education already recognizes as completely inaccurate. It only measured first-time full-time students, frankly for students who have humbly served this country in the military, and captures almost none of them in the metrics.

MAUREEN CAVANAUGH: What is the graduation rate?

MARK BRENNER: Mister Glantz is well aware ñ

MAUREEN CAVANAUGH: What is the graduation rate at the San Diego campus?

MARK BRENNER: I do not have the specific San Diego campus graduation rate, but we do put out an academic report which makes clear that our graduation rates are in the neighborhood of thirty-five or 36%. There is significant room for improvement there, but there is a significant room for improvement at a number of schools that both of the gentlemen have already mentioned.

MAUREEN CAVANAUGH: Is it the contention at the University of Phoenix that veterans are getting a good education, especially at the San Diego campus?

MARK BRENNER: Yes, we provide what we believe to be an exceptional quality of education. Mister Glantz was included in a visit to our San Diego campus. He sat in on a class that had a 15 to 1 student-teacher ratio. In that particular class there were twelve military affiliated students. I believe he saw with his own eye the high level of service that we provide to these brave men and women. From our standpoint, we hope that Mister Glantz includes some of the individual student experiences that he heard about. People that rated their educational experience on par with some of the highest level private nonprofit universities in the country.

MAUREEN CAVANAUGH: Does the University of Phoenix have a special outreach to veterans in its marketing?

MARK BRENNER: We have a specific outreach to military students and veterans. We do it as part of our service. I do know that you physically mentioned earlier in the piece about post-2009 G.I. Bill benefits. I think that is an excellent point. They are incredibly generous benefits for military students, but I hope that we had the opportunity to note that we have been serving military families for decades now. We are not new in this outreach. We believe it to be an important part of our mission. We were founded to help law enforcement officials, nurses, and teachers continue education, and we view as an extension to that our commitment to military students.

MAUREEN CAVANAUGH: If University of Phoenix is doing such a good job in educating veterans, why won't the University of Phoenix released numbers on how many veterans are able to find jobs in the careers that they get degrees in at the University of Phoenix?

MARK BRENNER: That is a very fair question. I think over the next few years we will continue to provide additional information. I don't have the specific data available to me today, and unlike the data that Mister Glantz has been using, iFed data which is inaccurate, it is simply not fair to your listeners to not provide the most accurate data we possibly can. You have my personal commitment that we will continue to provide more data about military students and placement rates. We have gone into a voluntary agreement with the state of California to provide more of that data, and we are certainly excited to learn more about it. I should note that when the University of Phoenix was founded in the 1970s, 100% of our students were working adults. So having reporting data regarding placement rates, rates of employment, it was not a priority to us. But as we have seen the shift in the University to provide more access to more students, it is an obligation that we have to continue to provide data, and we take that.

MAUREEN CAVANAUGH: Thank you for speaking with us. I appreciate it. Aaron, I would like to get your reaction to what Mark said, and to follow up on his main contention, that is if these for-profit universities have such poor outcomes, what are the reasons that veterans keep choosing to go?

AARON GLANTZ: I think part of it is that they spend enormous amounts of money on marketing. The University of Phoenix, the Apollo Education Group is a publicly traded company, SEC filings show that they only spend about 40% of their budget on education. Most of the rest goes to marketing, recruiting, and profit. If you are looking at a community college where almost all of the money is going to actual education, there is no large-scale effort to convince people to enroll there. In fact that someone goes to a community college they are likely to hear from a counselor, it may be hard to get class that they want, it may be hard to graduate on time. Honest, tough talk from a counselor who is not getting paid based on a performance in terms of how many people they get in the door. At the University of Phoenix they have a whole operation specifically to get these customers to pay money to the institution. I want to react also to what Mark was saying about the data that we used in our story from the Department of Education that showed that the University of Phoenix San Diego campus had a graduation rate of under 15%, and get had received $95 million in G.I. Bill money, more than any campus in the country. That number, as Mark suggested, is related to the first-time full-time students. That might not necessarily match well with the veteran's experience. I asked the University of Phoenix when I was doing my investigation to give me real numbers about their graduation rate, and they would not do it. They have also lobbied hard in Sacramento against regulations that would compel them to do that, and in fact in a letter to lawmakers, the University of Phoenix lobbyists said that providing that data would be ìcumbersome and of little practical value.î Further they added that what they would find that veterans would be the same as the overall graduation rates. They are trying to have it both ways, they are trying to say that the low official numbers are inaccurate, but they do not want to provide any other information to us.

MAUREEN CAVANAUGH: What about Ashford University and other for-profit schools? Do we know anything about their graduation rates, or how many veterans who sign up for those schools actually get jobs in the fields that they trained for?

AARON GLANTZ: We are only talking extensively about the University of Phoenix here, because it is the largest recipient of G.I. Bill money. Almost $1 billion across the country. When we talk about Ashford, California College of San Diego, DeVry University, if any of these firms have received enormous amounts of G.I. money, we would be having a similar conversation.

MAUREEN CAVANAUGH: Bob, you counsel vets, and you hear from vets. They are considering higher education, they are considering using G.I. Bill money. What do you tell them to do to avoid throwing that money away?

ROBERT MUTH: As part of our veterans clinic, besides representing individual veterans who find themselves in disputes with for-profit institutions over the use of their G.I. Bill, we also do extensive outreach. We go to veterans group's to talk to individual veterans or those who assist veterans. We tend to focus on trying to ensure that they make an informed decision, rather than pushing them one way or another, in terms of for or against the school. We tell them to look out for potentially misleading job placement statistics. If the numbers look too good to be true, they probably are. We try as hard as we can tell veterans to acquire into the accreditation of the school. That is what we see time and again, where schools will misrepresent accreditation status to veterans, and once the veteran has pleaded the program they find out that they are not eligible to sit for licensing exams and those sorts of things. Accreditation issues also lead into the ability for credits to transfer. You will have veterans who go to speak with a recruiter and they will tell them that hey, they are not sure where they will end up ultimately. They say no problem, the credits will transfer because they have this level of accreditation, and it will turn out to not be true. The other thing we asked them is to get in writing all of the different representations that recruiters will make. Often times we will see, time and again veterans will tell us a story that will sound like what we have heard from veterans who went to the same school. When you actually breakdown certain documents, it essentially will waive any representations that the recruiters made. It is important to veterans, if they hear something that sounds fishy, to get it in writing. And they inquiry into whether or not the G.I. bill will truly cover all of the cost of education. Finally when they have a choose that relate to, and unfortunately and infuriatingly, we have service connected disabled veterans who have come to us and said that they told the schools that they anticipate that they would have some issues related to post traumatic stress or traumatic brain injury, and the school will ensure them that they will be able to assist them, and once the student actually tries to avail themselves of benefits, it turns out that there is no one there to assist them. The key is for veterans to do their due diligence, and ensure that whatever they are told is ultimately reduced to writing.

MAUREEN CAVANAUGH: I am out of time. Thank you both very much.