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White House May Close Loophole That Sends Billions To For-Profit Schools

ROBERT SIEGEL, HOST:

Believe it or not, the Super Bowl and today's White House budget have a connection. The game was played at the University of Phoenix Stadium. University of Phoenix is a for-profit school, and it benefits from an obscure rule that lets for-profit schools get extra revenue from the federal GI bill. And here's the connection - the White House budget announced today seeks to change that rule. NPR's Quil Lawrence reports.

QUIL LAWRENCE, BYLINE: The post-9/11 GI Bill aims to get new vets into college, just like the original GI Bill did after World War II. But college is different today. There are more for-profit and online schools. Paul Reicoff is with Iraq and Afghanistan Veterans of America.

PAUL REICOFF: Eight out of 10 of the top recipients of money, or post-9/11 GI Bill, are for-profit schools. It's not Harvard. It's not Columbia. It's for-profit schools. And these schools aren't doing well.

LAWRENCE: Not doing well for their students. For many schools, fewer than 2 out of 10 graduate. At the same schools, about a quarter who do graduate can't get a job good enough to pay back their student loans. What's called the 90/10 Rule was set up as kind of a quality control. It bars for-profit schools from getting more than 90 percent of their revenue from federal aid - Pell Grants, for example. The idea is a school should be able to come up with 10 percent of its revenue from people willing to pay with their own money. The Obama administration wants to close a loophole. Right now, GI Bill funds aren't counted as federal money. Reicoff says for-profit schools, like University of Phoenix, have benefited from that exception.

REICOFF: They've taken full advantage of this loophole, and they've made a lot of money. And some of that money is being spent on naming a stadium for a university that doesn't have a sports program. That money should go to veterans.

LAWRENCE: For-profit schools say they're providing an education to people who wouldn't otherwise go to college.

MARK BRENNER: We graduated over 10,000 students who are affiliated with the military each and every year.

LAWRENCE: Mark Brenner is chief of staff at the Apollo Education Group, the parent company of University of Phoenix. He says online courses are a natural for vets. They move around a lot and sometimes have jobs and families to work around. Brenner also says the 90/10 Rule doesn't measure the quality of a school. It just shows how many at that school need financial aid.

BRENNER: The reality is if you had a 90/10 metric that was more restrictive, you would be hurting lots and lots of families who have first-generation college students.

LAWRENCE: Veterans organizations come down on both sides of the issue. The American Legion is against changing the 90/10 Rule. But this debate affects a new generation of vets - the people Paul Reicoff represent. He says Iraq and Afghanistan vets have one shot at using GI Bill money to get a good education.

REICOFF: Every single day we hear from veterans who have their GI Bill burnt out. They have a ton of debt, and they have a degree they can't use. And they feel like they were not getting the most out of their money.

LAWRENCE: Advocates hope changing the rule will force for-profit schools to compete in the market and offer a better education for vets. But it's up to Congress to decide whether to take up the Obama administration's suggestion. Quil Lawrence, NPR News. Transcript provided by NPR, Copyright NPR.

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