By Diane Bartz
WASHINGTON (Reuters) - For-profit schools, already subject to a government crackdown over academic standards, got a nearly eight-fold increase in veterans' education funding over the last five years, according to a report issued on Thursday.
Senator Tom Harkin, who chairs the Health, Education, Labor and Pensions Committee said combined Veterans Affairs and Defense Department monies to 20 for-profit schools increased from $66.6 million in 2006 to a projected $521.2 million this year.
"Given what we've already uncovered about the quality of education at many for-profit schools, I have serious concerns about whether the veterans who enroll at these schools are getting the education they deserve," Harkin said in statement accompanying the committee report.
For-profit schools often offer graduate and undergraduate degrees but also train people wanting to become mechanics and medical technicians, among other trades.
But some of the schools have come under fire for high loan default rates and low graduation rates.
The sector is in a pitched battle with the U.S. Education Department, which is moving to tighten rules that could cost some schools vital access to federal funding.
A preliminary rule would bar federal loans to students in programs where fewer than 35 percent of former students are paying back loans or capable of doing so. A final rule on repayment rates is due out early next year.
Shares of for-profit schools have been hit hard by the scrutiny from the government and lawmakers.
Industry giant Apollo Group Inc's stock was down 3.9 percent to $36.58 on Thursday, and is down about 45 percent from a 12-month high back in April. Apollo's University of Phoenix had a six-year graduation rate of just 9 percent in 2008.
The Everest brand of schools, owned by Corinthian Colleges, has more than a dozen schools with loan default rates above 20 percent and two schools above 30 percent, according to Education Department data. Corinthian shares were down 3.4 percent on Thursday and are down about 77 percent from April.
The Education Department is also seeking to ban entirely incentive pay for admissions recruiters, limit the creation of new programs, require disclosure of graduation rates and job placement rates to new students and strengthen the department's hand in taking action against schools that fail to advertise honestly.
Students at for-profit schools represented 26 percent of federal education loan borrowers for 2008-2009 but 43 percent of defaulters, according to the Education Department. And a study last month by Education Trust found that just 22 percent of freshmen who enrolled in for-profit schools graduated within six years, compared with 57 percent at nonprofit schools.
(Reporting by Diane Bartz; Editing by Tim Dobbyn)
