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GI Bill a 'cash cow' for some Pennsylvania schools

Debra Erdley
| Saturday, March 25, 2017, 10:55 p.m.
Soldiers salute the U.S. flag during the Pledge of Allegiance at a welcome home ceremony for soldiers returning from a deployment in Afghanistan, at Fort Carson, Colo. For veterans, the GI Bill can be the ticket to a debt-free college education.
Soldiers salute the U.S. flag during the Pledge of Allegiance at a welcome home ceremony for soldiers returning from a deployment in Afghanistan, at Fort Carson, Colo. For veterans, the GI Bill can be the ticket to a debt-free college education.

Editor's note: This is the first of a two-part series looking at the way the GI Bill is used in Western Pennsylvania. The second part will appear Monday.

Shortly after the Art Institute of Pittsburgh—Online Division hired LaMont Jones as a recruiter in 2009, the school launched a push to recruit military veterans — and the education benefits they receive for their service, he said.

Federal records show that from 2011 to 2016, the for-profit school that graduates just 3.6 percent of enrolled veterans reaped $65 million through the Post-9/11 GI Bill — making it the largest recipient of money from the veterans' program in Western Pennsylvania during that span and second statewide only to Penn State's $110 million. Schools across Pennsylvania collected $1.1 billion in GI Bill money during that time.

“Various strategies were employed to entice (veterans) that were not routinely granted other prospective students, including automatic waiver of application and enrollment fees. Eventually, special admissions teams were set up to recruit and enroll vets exclusively,” said Jones, of Wilkinsburg, who no longer works for Art Institute parent EDMC.

Neither the Art Institute nor EDMC, once the nation's largest for-profit education company, would discuss graduation rates or recruitment practices.

“At this time, we are not interested in participating in the piece. Thank you for reaching out,” company spokesman Jeff Durosko wrote in an email response to a Tribune-Review interview request.

The Servicemen's Readjustment Act of 1944 — commonly referred to as the GI Bill of Rights — established a number of benefits for veterans, including money for education and job training. Congress in 2009 updated the program with the Post-9/11 GI Bill, which is administered by the U.S. Department of Veterans Affairs.

At the Art Institute, it quickly became apparent that veterans who qualified for the revamped program were considered “cash cows,” Jones said. The former recruiter explained that was because the GI Bill, which offers veterans 36 months of tuition and a stipend for books and living expenses, paid “more fully and quickly” than other types of federal student aid.

“This was important because once that type of funding was disbursed to the school, it was for keeps even if the student discontinued before finishing what was already paid for — which happened often,” said Jones, who has a pending federal lawsuit against EDMC for racial and age discrimination.

The company has denied the allegations in court filings.

Federal law requires for-profit schools to draw at least 10 percent of their income from sources other than federal loans and grants — with the exception of money from the GI Bill, which is exempt.

Troubled record

Even before the Post-9/11 GI Bill, recruitment practices at the Art Institute of Pittsburgh Online came under fire. They were the genesis of a 2007 whistle-blower lawsuit filed by former admissions officers at the school.

That suit claimed the Art Institute used deceptive and misleading claims, including inflated job-placement numbers and costs to get students in the door, and violated a federal ban on paying recruiters based on the number of students enrolled.

In 2015, after the U.S. Department of Justice joined the suit, EDMC paid $95.6 million to settle claims that it had defrauded the federal government of $11 billion in federal student aid between 2003 and 2011. EDMC also paid $103 million to settle complaints from multiple state attorneys general who accused the school of engaging in fraudulent practices to sign students up for pricey private loans.

The settlements allowed EDMC to end the lawsuits without admitting guilt.

But the fallout did not end.

Last month, the Project on Predatory Student Lending at Harvard Law School sued the Department of Justice over its refusal to release documents surrounding the settlement.

Lawyers at the law school clinic say those documents could make it easier for students to obtain forgiveness for federal loans they took out to attend the schools.

“When a corporation engages in predatory practices, it is doing that at the expense of taxpayers,” said project spokeswoman Amanda Savage, noting that taxpayers underwrite federal loans and grants.

The future is unclear for EDMC.

Last month, the company announced it plans to sell its for-profit schools — including 31 Art Institutes across the country — to the Dream Center. The nonprofit California foundation did not respond to calls or emails seeking its position on veterans' education.

Fighting back

The pending sale, which must get U.S. Department of Education and IRS approval, has done little to quell complaints from veterans' advocates. Many question whether the school, which is marked with a yellow caution flag on the Veterans Affairs' school comparison website, should be permitted to accept GI Bill students.

Graduation rates alone should disqualify the online school, said Chris Neiweem, vice president of veterans policy for Vets First, a veterans service organization with the United Spinal Association.

“I think 3 percent is just a disaster,” he said. “It sounds like taxpayers are funding failure.”

Allowing schools with such performance records to participate in the program tarnishes “the most-prized veteran benefit available,” Neiweem said.

The Art Institutes have a long record of targeting veterans with predatory recruitment practices, said Carrie Wofford, a former congressional investigator who is president of Veterans Education Success.

“The problem is that Art Institutes makes huge promises to veterans to induce them to enroll and hand over their GI Bill (benefits),” she wrote in an email. “The VA and Education Department need to do more to counter the aggressive and deceptive college recruiting that veterans face.”

Wofford said veterans who enroll in courses and then drop out before the end of a semester face an added burden. When that happens, schools keep all tuition payments and the VA can confiscate tax refunds and disability benefits from vets as repayment.

U.S. Sen. Bob Casey, D-Scranton, last summer joined 27 other senators who wrote the VA and urged the department to “strengthen oversight, enforcement and accountability” of schools that participate in the GI Bill program and hold schools accountable for unscrupulous recruitment practices.

“I have advocated for tough consumer protection measures to ensure educational institutions cannot take advantage of our veterans,” Casey told the Tribune-Review when asked about graduation rates reported by the Art Institute of Pittsburgh Online. “Consumers — especially veterans and their families — deserve transparency into what kind of return on investment they can expect from colleges and universities.”

Federal law permits the VA to exclude schools that do not meet guidelines from participation in the program. But multiple lawsuits, a landslide of complaints and a 2016 written request from 23 veterans groups didn't change the status of the Art Institute of Pittsburgh Online as an approved participant.

To date, the VA has answered complaints with pamphlets and videos advising veterans to explore their options before enrolling in any school. It also offers an online comparison tool that allows vets easy access to graduation and retention rates as well as the number of student complaints on file against any school.

Advocates hope David Shulkin, the VA's newly confirmed secretary, will act to change that.

Neither the VA nor Shulkin responded to requests for comment.

However, Shulkin agreed during his confirmation hearings last month to look into complaints and report back to Congress within 90 days.

Debra Erdley is a Tribune-Review staff writer. Reach her at 412-320-7996 or derdley@tribweb.com.

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