California Cracks Down on University of Phoenix's Veteran Enrollments

The Wall Street Journal

The state of California has banned the San Diego campus of the University of Phoenix from enrolling additional veterans in seven of its programs, joining a growing list of government agencies cracking down on for-profit colleges.

A state veterans' watchdog took the unusual action in June after an audit conducted by the group found that veterans eligible for federal funding made up more than 85% of the students in the programs. The group said that violated a federal rule aimed at stopping schools from targeting former military personnel.

The university, a subsidiary of Apollo Education Group Inc., disputes the results of the audit and said that it expects the audit to be revised. The results of the audit were earlier reported by the Center for Investigative Reporting.

In early July, Corinthian Colleges Inc., based in Santa Ana, Calif., announced it would largely cease operations after the for-profit school came under scrutiny by the U.S. Department of Education for its marketing practices, dropout rates and loan defaults.

Additional investigations into the business practices of for-profits are under way by several state attorneys general, as well as a host of federal agencies, including the Department of Justice, the Securities and Exchange Commission and the Federal Trade Commission.

"Nationally, we're seeing a lot more engagement from all levels of government on this issue," said Ben Miller, an education analyst at the New America Foundation, a nonpartisan think tank. Mr. Miller said he has never heard of the Department of Veterans Affairs barring a large school from enrolling veterans.

On Wednesday, a committee chaired by Sen. Tom Harkin (D., Iowa) issued a report criticizing the marketing tactics that for-profit colleges are using to attract growing numbers of veterans and the billions of dollars they bring with them in GI Bill funds. The report found that eight of the 10 largest recipients of money from the post-9/11 GI Bill were for-profit colleges. The government pays an average of twice as much to send a veteran to a for-profit college than to public colleges and universities, the report said.

While the total number of students at for-profit colleges has decreased since 2009 amid government crackdowns on the schools, the number of veterans surged to 697,500 from 330,000 between 2009 and 2013, the report found. Students at for-profit colleges represent about 13% of college students but nearly half of all loan defaults, according to the White House.

The report also criticized for-profit colleges for how much they spend on marketing and recruiting and alleged they make false promises to veterans.

Steve Gunderson, president of the Association of Private Sector Colleges and Universities, disputed several of the findings and called the investigations part of an ideological war against the schools. "This is all political theater," he said. "You're seeing charges, not convictions."

In its June 9 letter, the California State Approving Agency for Veterans Education wrote that the seven programs in question, including an MBA, "have exceeded the 85% VA student threshold." The agency found no other problems during the survey and noted the university doesn't use fraudulent and unduly aggressive recruiting.

The department sent the university a letter that said the school "shall not enroll any veterans/eligible persons in the aforementioned programs."

In a statement, the university said only one of the programs exceeded the 85% threshold, and it "agreed voluntarily to close enrollments to VA students" for that program.

Write to Ben Kesling at benjamin.kesling@wsj.com and Douglas Belkin at doug.belkin@wsj.com



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