Soldiers of fortune: for-profits reap federal spoils

For-profit higher education firms received half of all spending from a US government programme that allows military servicemen and women to study while on active duty, according to figures released by a senator.

April 12, 2012

Tom Harkin, a Democrat from Iowa who chairs the US Senate Committee on Health, Education, Labor, and Pensions, published the figures using data from the Department of Defense (DoD).

The data show that for-profit firms received $280 million (£177 million) out of $563 million from military tuition assistance (TA) spending in 2011. Six of the top 10 recipients were for-profits, receiving 41 per cent of the TA cash between them: American Public Education, Bridgepoint Education, TUI Learning, Apollo Group (parent company of the UK higher education provider BPP), Columbia Southern University and Grantham University.

The report issued by Mr Harkin says that Bridgepoint, majority owned by private equity firm Warburg Pincus, increased its TA revenue by $ million to $40 million, a 199 per cent rise over two years.

For-profits have a "perverse incentive" to target military students, the report adds. While programmes such as the military TA "are federal educational benefits", they "do not technically count as such under the US Department of Education's 90-10 rule" - a requirement that no more than 90 per cent of for-profits' revenues can come from federal financial aid.

The report calls for "all federal dollars" including TA to be counted in the 90-10 rule, and for the DoD to set student outcome thresholds to "ensure that students' time and benefits and taxpayer dollars are not wasted on schools with dubious practices and poor outcomes".

It refers to recent research by Harvard University academics that shows students at for-profits have lower success rates - including employment outcomes - than their counterparts at public and not-for-profit colleges.

Sally Hunt, general secretary of the UK's University and College Union, said that many of the for-profits identified in the report "are now circling UK higher education".

john.morgan@tsleducation.com.

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