Idaho Attorney General Lawrence Wasden and the attorneys general of 21 other states sent a letter in May to congressional veterans' and education committees, asking them to close a loophole that allows for-profit schools to receive potentially all of their revenue from federal funding sources.
The current law, established about 14 years ago, says for-profit schools can derive no more than 90 percent of their revenue from federal grants and loans. But funds from the GI Bill and Veterans Assistance student aid programs aren't subject to that rule. That "violates the intent of the law," said the letter signed by Wasden.
"It's a loophole someone could drive a Mack Truck through," said Brett DeLange, deputy attorney general and chief of Idaho's consumer protection division.
Wasden and the other attorneys general said some for-profit colleges "engage in high-pressure sales tactics, targeting vulnerable populations including disabled veterans." Their students have a harder time repaying their loans than students of nonprofit or public schools, the letter said.
Since the 90 percent rule was put in place, veterans and service members have been given more financial aid the Post 9/11 GI Bill added billions of dollars to the pot and "have become a rich target for aggressive college recruiters," the letter said.
A Senate committee analyzed 20 for-profit schools and found that funding under the military-education benefit rose 683 percent between 2006 and 2010 to an estimated to hit $521 million.
That's partly a result of the credit crunch, which led private lenders to stop giving risky student loans. The schools turned to military funding to make up for lost revenue, the letter said.
Idaho last month joined in a $2.5 million multistate settlement against a California company that allegedly used deceptive tactics to push military veterans to attend for-profit colleges through its website, GIBill.com. As part of the settlement, the company handed over control of GIBill.com to the U.S. Department of Veterans Affairs. The settlement awarded Idaho $100,000 to reimburse the Attorney General's Office for its consumer protection investigation.
Five for-profit schools with locations in Boise and Meridian brought in $53 million in tuition in 2009-2010 from about 5,000 students in 2009-2010, according to State Board of Education documents obtained last year by the Idaho Statesman.
Audrey Dutton: 377-6448