Feds face heavy fines for for-profit schools that deceive troops and veterans

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Federal Trade Commission officials vow to crack down on “stupid” recruiting tactics used by for-profit colleges against service members and veterans, with harsh new financial penalties for offenders.

On Wednesday, the commission sent notices to 70 of the largest for-profit colleges warning them of possible fines of more than $ 43,000 per offense for unfair or misleading recruitment tactics. Officials said the move was in response to a 70 percent increase in complaints about education and recruitment problems between 2018 and 2020.

“For too long, unscrupulous, for-profit schools have exploited students with impunity without paying fines for cheating on their students and driving them into debt,” FTC chair Lina Khan said in a statement. “The FTC is reviving a dormant authority to deter wrongdoing and hold bad actors accountable for abusing students and taxpayers.”

Industry representatives criticized the move as an unfounded attack on their business model.

“The FTC announcement does not contain any findings of misconduct in a for-profit establishment,” said Jason Altmire, president and CEO of Career Education Colleges and Universities. “The public announcement that it will send warning letters to 70 of the largest for-profit institutions arbitrarily challenges the integrity of institutions that fully comply with FTC regulations.”

But Commission officials in their announcement pointed to several recent high profile comparisons related to false claims about job placement and employment opportunities related to for-profit courses. They insist that action is needed to contain the industry and protect students, especially military and veterans.

“For-profit schools have had a strong incentive to enroll veterans as members of the education service can pay for college,” the commission said in a statement. “This has led to aggressive attacks on soldiers, veterans and their families.”

Earlier this year, lawmakers included a revision of the so-called 90/10 rule in a COVID emergency aid package, which requires colleges and universities that at least 10 percent of their income comes from non-state sources.

The idea behind the regulation is to ensure that for-profit institutions are not only funded by federal funds, but also involve significant investments by students interested in their continuing education.

However, due to a loophole in federal law, Department of Defense GI Bill benefits and study support programs were not counted as federal dollars even though they were taxpayer-funded benefits. This gave the schools an incentive to approach these groups and their stable, reliable tuition fees.

The changes approved last spring closed that loophole, but FTC officials said troops and veterans continue to face severe attacks from schools.

Industry officials say this is because these groups are more likely to take non-traditional college courses to better align with their family and work plans.

Altmire said he was “surprised that only for-profit institutions are subjected to this”. [new] increased civil fines while other malicious actors under the jurisdiction of the FTC are not subject to the same standards. “

But veteran advocates welcomed the move.

“To date, veterans and service members have been seen as a sauce for some of the worst schools in America who took advantage of grandiose marketing programs and even outright lies to keep investors happy,” said William Hubbard, vice president of Veterans Education Success.

“That changes all of that,” he added. “This is the FTC that is declaring war on some of the worst universities. Students will have a better chance of attending better schools without all of the tricks up the sleeve of so many fly-by-night programs. “

FTC officials said the fines were based on misleading claims regarding “their graduates’ career results, including whether a particular occupational field is in demand, the percentage of graduates getting jobs in their chosen field, whether the institution can help a graduate” will get a job and how much money a graduate can expect. “

A full list of the institutions that have been warned by the Commission is available on their website.

Leo covers Congress, Veterans Affairs, and the White House for Military Times. He has been reporting on Washington, DC since 2004, focusing on military personnel and veteran politics. His work has received numerous awards, including a 2009 Polk Award, a 2010 National Headliner Award, the IAVA Leadership in Journalism Award, and the VFW News Media Award.


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