If the White House Gets Its Way, For-Profit Colleges Won't Be Happy

February 6th 2015

Alicia Lutes

Call us crazy, but it seems mighty bizarre that an educational institution, with no sports teams of any kind, would want to — and is able to afford to! — spend $155 million on the rights to name a football stadium, doesn't it?

If you watched the Super Bowl, you were probably all too aware of the arena in which they played: the University of Phoenix stadium. Home to...a team that is in no way affiliated with the school (it's where the NFL's Arizona Cardinals play) but was made possible thanks to the — wait for it — G.I. Bill. If that strikes you as a bit incongruous, you're not alone. That's why the White House is hoping to close the loopholes that allow a place like U of Phoenix the ability to afford such an expensive branding opportunity.

As it currently stands, for-profit higher education is a $33 billion-a-year industry, but 80 percent of its money comes from taxpayer dollars via strategic loophole exploitation in places like the GI Bill. These bills — the GI Bill and the Defense Department's tuition assistance program — are not factored into the 90/10 Rule that establishes how and in what way colleges should be able to afford their business model. The 90/10 Rule mandates that all schools should be able to generate 10 percent of its revenue from students willing to pay out-of-pocket for their education at their institution of choice.

All for-profit schools currently hover juuuuust under the limits of the 90/10 Rule without taking GI and veterans' benefits into consideration, a.k.a. the loophole the White House wishes to shutter. Naturally, for-profit colleges aren't happy about this potential loophole closure because that's how they make a huge amount of their money. And we're all paying for it!

In fact eight out of the top ten recipients of GI Bill funds are for-profit schools (the University of Phoenix just so happens to be at the head of that pack). And if that doesn't piss you off, perhaps these statistics will. Like the fact that these schools — which spend far more of their money on marketing than actual education costs — graduate an average of LESS THAN 2 out of 10 students. And if and when they do graduate, nearly a quarter of them are unable to land a job that earns enough to pay back their student loans.

And it's also — let's face it — an affront to our veterans, who work hard and sacrifice so much. Shouldn't that money go to say, I don't know, actually educating our veterans? Or what about fixing the Veterans' Affairs system as a whole? Lord knows there's some work that needs to be done there, too. Work that's arguably more important than name recognition at a glorified marketing bonanza.