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Many Calif. Vets End Up With Huge Debts From For-Profit Colleges

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SAN FRANCISCO (KPIX 5) — Nearly 600,000 veterans are going to back to school on the GI bill. But many veterans are recruited by for-profit schools with high tuition, high default and high drop out rates.

Last year, President Barack Obama accused some for profit education firms of taking advantage of those who have served in the military.

“There are people out there that are less interested in helping men and women in uniform getting ahead, and more interested in making a buck,” Mr. Obama declared during a weekly address.

Sen. Tom Harkin, a Democrat from Iowa, released a report shedding light on schools that he said need more oversight because of past abuses.

“You will find documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes and tax payer dollars spent on marketing and profit,” said Harkin of the practice of certain universities.

The post 9/11 GI bill covers all tuition at public schools or universities and up to $17,000 yearly at private schools. Since many for-profit schools have much higher tuition, many veterans find they are forced to get loans to cover the additional costs.

While the veterans pay high tuition, some said they received scant guidance once they are enrolled.

“I don’t think there is a lot of advice,” says Matt Bray, a veteran of the United States Airforce who attends Academy of Art University in San Francisco.

For his part, Bray believes his degree will enable to get him a good job. But upon graduation, he expects to shoulder $60,000 – $70,000 of debt on top of the nearly $50,000 given to him through the GI Bill.

“Veterans with GI Bill options really should not need to take on this debt and it can really haunt them if they make a mistake,” says Rohit Chopra with the United States Consumer Financial Protection Bureau, who added that the agency does have a website to help guide veterans as they make choices in education.

Chopra admits there are institutions who aim to take advantage of a loophole in a federal law called the “90-10 rule.” The regulation requires all academic institutions to get at least 10 percent of their revenues from non-government sources. But there is catch: money that comes from the GI Bill can go towards that 10 percent, meaning for-profit educators have a reason to target veterans.

“I think veterans and active duty service members are sometimes shocked at the types of recruiting methods that they are seeing,” said Chopra. “They are seeing schools at job fairs and other places where you would not expect them.”

Henley Putnam University, which Harkin’s senate report highlighted as an organization that required more oversight, is headquartered in an office park in San Jose, with no visible signs of government action so far.

At the Academy of Art in San Francisco, where Matt Bray attends classes, the Cal Grant program has put substantial limitations on the school’s ability to collect state funding. The university’s privilege to accept these funds was revoked for new students after its graduation rate dipped below 30 percent, a requirement under state law.

The school has since sued the California Student Aid Commission and said that overall their graduation rate has been above the requirement.

“Over an eight year period, we averaged over 34 percent graduation rate,” said Rebecca Delgado Rottman, spokesperson for Academy of Art University. “Whether or not that is good enough, the fact of the matter is that according to the Student Aid Commission, 30 percent is what they expect.”

Still, consumer protection advocates urge veterans to seek out options that are less expensive and have a built in support system for veterans.

De Anza College in Cupertino has a special program to support veteran students and boasts some of the highest transfer rates to four-year programs in the nation.

“It’s really an affordable option and they have a wonderful educational experience here,” said Stacey Cook, Dean of Education at De Anza College, who said classes go for just $21 a unit.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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