Bloomberg News

For-Profit Colleges Targeted for Law Protecting Veterans

January 24, 2012

(Updates with trade group comment in sixth paragraph.)

Jan. 19 (Bloomberg) -- For-profit colleges that solicit soldiers and veterans will face proposed legislation to curb recruiting, the U.S. Senate’s No. 2 Democrat said.

Senate Majority Whip Richard Durbin of Illinois will discuss the measure he plans to introduce at a Chicago forum on Jan. 23 examining for-profit colleges’ military recruiting, according to a statement by his office today.

Congress, the Education Department, the Justice Department and state attorneys general are scrutinizing the sales practices and student-loan default rates of for-profit colleges, which received almost $32 billion in federal grants and loans in the 2009-10 school year.

Durbin’s proposal will “reduce incentives for for-profit colleges to target and aggressively recruit service members and veterans,” according to the statement, which provided no details.

Eight for-profit college companies -- including Apollo Group Inc., which owns University of Phoenix, the largest chain by enrollment; and Education Management Corp., the second- biggest -- received about $626 million in veterans education benefits in the most recent academic year, the Senate education committee said in a report in November.

Durbin’s legislation will create “barriers to critical job-training and educational programs for veterans,” Brian Moran, interim president of the Washington-based Association of Private Sector Colleges and Universities, which represents for- profits, said in a statement.

Apollo, based in Phoenix, dropped 1 percent to $53.50 at the close in New York. Pittsburgh-based Education Management rose 0.9 percent to $25.48.

--Editors: Chris Staiti, Stephen West

To contact the reporter on this story: John Hechinger in Boston at jhechinger@bloomberg.net

To contact the editor responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net.


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