Senators question targeting of for-profit universities

U.S. Sens. John McCain (R-AZ), Lamar Alexander (R-TN) and Jeff Flake (R-AZ) are questioning the recent scrutiny of for-profit universities and federal funding, namely the University of Phoenix being placed on probation in the Department of Defense’s Tuition Assistance Program for active duty military personnel. 

The lawmakers recently sent a letter to Ashton Carter, the secretary of Department of Defense (DoD), urging him to review the decision of Dawn Bilodeau, chief of voluntary education for the DoD, to place the University of Phoenix on probationary status with the program. 

Bilodeau suspended the University of Phoenix from the Tuition Assistance Program on Oct. 7, citing misuse of official military seals and other trademark insignia, and failure to give proper notice to appropriate officials before entering military bases.

When institutions and universities agree to receive federal funding through the Tuition Assistance Program, they sign an agreement – the DoD Voluntary Education Partnership Memorandum of Understanding (MOU) – which outlines the commitments an educational institution must abide by in order to remain in good standing with the DoD.

A letter that Bilodeau sent to the university in October cited ongoing investigations by the Federal Trade Commission and the California state attorney general.

"The allegations associated with these inquiries, if substantiated, would violate several additional provisions of the University of Phoenix MOU," Bilodeau stated in her letter.

While the university is on probationary status, currently enrolled eligible students will continue to receive benefits from the Tuition Assistance Program, but newly enrolled or transfer students will not be eligible. In addition, the university is not allowed to participate in various activities at military installations, including job training, career events, fairs and other sponsored events.

The Department of Education (DoE) created a non-public interagency task force in October 2014 to oversee for-profit postsecondary institutions. In addition to the DoE, the task force is comprised of representatives from the Federal Trade Commission, the Consumer Financial Protection Bureau, the Internal Revenue Service, the Securities and Exchange Commission, the Department of Justice, the DoD, the Department of Veterans Affairs, and the Department of Labor, which engages with states’ attorneys general.

The objective and priorities of the task force remain unclear, though. 

McCain, Alexander and Flake joined Sens. Johnny Isakson (R-GA) and Ron Johnson (R-WI) in sending a letter to DoE Secretary Arne Duncan on Nov. 17 asking for more information about the task force.

“Yet, key questions regarding the task force’s authority, duties, responsibilities, goal, structure and actions remain unanswered,” the letter stated. “Despite that, individual members of the task force have propounded investigative requests for documents and information, and taken adverse administrative or civil action against individual for-profit institutions in a manner apparently violate of due process.”

Higher Education Tribune was unable to confirm a response from the Department of Education, but a follow-up letter from McCain and Lamar was sent on Nov. 20 requesting an in-person discussion with the leaders of the interagency task force.

The letter states McCain and Alexander’s staff received a briefing from Department of Education officials during which they were given few details and information about the task force, and “were led to believe that this task force was simply a mechanism for each member agency to provide information about its authorities and best practices.”

In addition, the staff was told no one outside the agencies have addressed or were invited to address the task force. The letter, however, calls out a meeting between U.S. Sen. Dick Durbin (R-IL) and the interagency task force where Durbin discussed his views of for-profit higher education and mentioned the meeting on social media. 

Durbin is openly skeptical of for-profit educational institutions.

McCain and Alexander, in turn, requested the opportunity to express their views to the task force members.

Critics of for-profit higher education claim military service members are a stable source of income for for-profit universities through the G.I. Bill and Tuition Assistance Program. They allege these institutions target military personnel, and the regulatory 90/10 rule serves as an incentive to go after this funding.

The 90/10 rule prohibits for-profits from receiving more than 90 percent of their revenue from federal funding. That 90 percent, however, does not include funds from the Department of Veterans Affairs’ G.I. Bill or the Department of Defense’s tuition assistance program for active military service members.

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U.S. Department of Defense

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