Post-9/11 GI Bill: Veterans Affected by School Closures
Released: 2019-06-19T00:00:00

Letter

Background

Post-9/11 GI Bill Benefits

VA has been providing veterans educational assistance benefits since 1944. We previously reported that these benefits have been put in place over time to compensate for compulsory service, encourage voluntary service, avoid unemployment, provide equitable benefits to all who served, and promote military retention. The Post-9/11 GI Bill, which took effect on August 1, 2009, is now VA’s largest educational program. This program generally provides benefits to veterans who served on active duty for at least 90 days beginning on or after September 11, 2001. Full benefits are generally available to those who served on active duty for 36 months, for which VA will pay the net cost for in-state tuition and fees at public schools and up to an annual maximum amount at nonprofit and for- profit schools ($24,477 in academic year 2019-2020). VA pays schools directly for tuition and fees and sends additional payments for housing and books directly to veterans who are eligible for these payments. To receive education benefits through the Post-9/11 GI Bill, students submit applications to VA, schools certify enrollments, and VA processes claims and payments.

Other Sources of Student Aid

For help covering the costs of their postsecondary education, veterans may also be eligible for grants and loans available from federal student aid programs administered by Education, such as Pell Grants and Direct Loans. According to Education data, an estimated 32 percent of student veterans had received Pell Grants and 28 percent had taken out Direct Loans, during school year 2015-16. VA education payments, such as Post-9/11 GI Bill benefits, are not considered when calculating eligibility for federal student aid and do not affect the amount of aid a veteran can receive from Education. Student veterans may also be eligible for state and institutional aid (scholarships from state governments or schools, for example).

Student Veterans Attend a Wide Range of Schools, but a Small Number of Schools Receive a Large Share of Post- 9/11 GI Bill Payments

Nearly 700,000 student veterans received Post-9/11 GI Bill tuition and fee benefits to attend almost 6,000 schools in fiscal year 2017. VA paid about 40 percent of the Post-9/11 GI Bill tuition and fee payments to public schools, 30 percent to nonprofits, and 30 percent to for-profits (see fig. 1).

Most student veterans used Post-9/11 GI Bill tuition and fee payments to attend schools that provided 4-year undergraduate programs (see fig. 2). Veterans may also use Post-9/11 GI Bill benefits for training opportunities at schools that do not offer college degrees, including training in areas such as driving, emergency medical training, and barber or beautician skills. These programs received about $360 million Post-9/11 GI bill tuition and fee payments in fiscal year 2017.

A relatively small number of schools received a large share of Post-9/11 GI Bill tuition and fee payments. In fiscal year 2017, the 50 schools that received the highest total amount of Post-9/11 GI Bill tuition and fee payments accounted for over 30 percent of all such benefits, collectively receiving $1.4 billion for over 190,000 beneficiaries. These 50 schools consisted of 14 public, 16 nonprofit, and 20 for-profit schools (see fig. 3). In fiscal year 2017, the 50 schools received between $11 million and $191 million each in tuition and fee payments and enrolled between around 350 and 28,000 Post-9/11 GI Bill beneficiaries. In contrast, among all schools receiving Post-9/11 GI Bill benefits in fiscal year 2017, the majority of them enrolled fewer than 15 veterans.

Student Outcomes Varied Among Schools That Received a Large Share of Post-9/11 GI Bill Payments

Student outcomes at the 50 schools that received the most Post-9/11 GI Bill tuition and fee payments were, on average, generally comparable to the national average, but varied more widely across sectors. Since available data on student veteran outcomes is currently limited, we analyzed common outcome measures for the broader student populations at each school:

4-year program graduation rates: the percent of first-time full-time students who completed a 4-year program within 6 years.

Full- and part-time retention rates: the percent of first-time students who enrolled in one fall and either successfully completed their program or re-enrolled in the next fall.

When examined as a whole, the average student outcomes for the 50 schools that received the most Post-9/11 GI Bill tuition and fee payments were generally comparable to the national average. For example, the average 4-year program graduation rate at the top 50 schools was 61— the same as the national average. For one of the outcome measures— full-time retention rate—the average was higher for the top 50 schools (83 percent) than the national average (75 percent).

Within the 50 schools that received the most Post-9/11 GI Bill tuition and fee payments, student outcomes varied across schools in different sectors (see fig. 4). For-profit schools had lower 4-year program graduation and retention rates compared to public and nonprofit schools among these 50 schools, although there was wide variation among schools in each sector.

School Closures Affect Thousands of Student Veterans

Although a relatively small number of schools close each year, these closures can affect thousands of student veterans. In 2017 we reported that about 95 schools closed in school year 2015-16, according to Education data, which was higher than in previous years, primarily due to a rise in for-profit school closures (see fig. 5).

Schools can close in different manners and for a variety of reasons, including declining enrollments, financial problems, loss of accreditation, and legal actions. When a school ceases operations in an orderly process over several months it gives students time to complete the current school term and make arrangements to transfer and continue their education at another school. The effect of school closures is often worse when the closures occur abruptly with little or no advance warning, because these schools generally do not have time to establish transfer arrangements that allow students to easily continue their education at another school.

Abrupt closures of large schools, although infrequent, can affect thousands of student veterans and result in large financial losses for the federal government and taxpayers. For example, Corinthian Colleges Inc. (Corinthian) enrolled more than 72,000 students before its closure in April 2015. The following year, ITT Educational Services Inc. (ITT), another large for-profit provider of higher education, closed all of its 136 campuses in September 2016, affecting more than 35,000 students. More than 7,000 Post-9/11 GI Bill students were pursuing educational programs at schools operated by ITT and Corinthian at the time of their closures, according to VA. More recently, closures at Education Corporation of America in 2018 and Dream Center Education Holdings in 2019, which operated schools under multiple brands, including Argosy University and several campuses of The Art Institutes, affected tens of thousands of students, including thousands of Post-9/11 GI Bill recipients.

Student veterans attending a school that closes may be eligible to have some or all of their Post-9/11 GI Bill benefits restored. As a result of the Harry W. Colmery Veterans Educational Assistance Act of 2017, VA restores GI Bill entitlements to eligible beneficiaries affected by recent and future school closures. Student veterans may also be entitled to a discharge on eligible federal student loans they may have received from Education or to have their Pell Grant eligibility restored if they are unable to complete a program because their school closed.

Despite these options for having benefits restored and loans discharged, school closures can still create hardships for veterans. As we have previously reported, college students in general can face challenges transferring credits and continuing their education at a new school under any circumstances. Students who transferred lost, on average, an estimated 43 percent of their credits, and credit loss varied depending on the transfer path, based on data from 2004 to 2009. For example, students who transferred between public schools—the majority of transfer students—lost an estimated 37 percent of their credits. In comparison, students who transferred from for-profit schools to public schools—which happens less frequently—lost an estimated 94 percent of their credits. Even if a student’s credits transfer, they may not apply toward fulfilling degree requirements for their intended major. In these cases, a student will likely have to take additional courses at their new school, which could potentially delay graduation and result in additional costs to pay for repeated courses. Further, some student veterans with credits that do not transfer may exhaust their Post-9/11 GI Bill benefits before completing their degree.

School closures can also exacerbate other challenges veterans may face pursuing their education. As we have previously reported, many student veterans already cope with challenges transitioning from the military to an academic environment. For example, they can face challenges navigating the academic bureaucracy, whether in attempting to receive transfer credit for previous college courses or in determining what other sources of financial aid may be available to them. Many student veterans are also trying to balance school with family and work obligations or dealing with the effects of combat-related physical and psychological injuries. When a school closes, the burden of finding and enrolling in a new school may be especially difficult for these veterans.

Closures can also pose a financial risk for the government and taxpayers to the extent that Post-9/11 GI benefits are restored and federal student loans are discharged. For example, in 2017 the Congressional Budget Office estimated that restoring Post-9/11 GI Bill benefits and other VA education benefits to student veterans who attend schools that closed will increase direct spending by $320 million over the 10 year period from 2018 to 2027. School closures can also result in hundreds of millions of dollars in financial losses for the federal government and taxpayers due to discharged federal student loans.

In conclusion, the Post-9/11 GI Bill has provided valuable education benefits to millions of veterans who attend a wide range of schools. However, when schools abruptly shut their doors, it can leave student veterans—who already face unique challenges in an academic environment—without a clear path to continuing their education and can force taxpayers to cover the cost of restoring their benefits and discharged student loans. Student veterans who continue their education at another school may also find that many of the credits they earned will not ultimately help them after they transfer, delaying their degrees and resulting in additional costs. As the number of school closures has increased in recent years, the risks and challenges associated with such closures are particularly salient for student veterans, their families, and the federal government.

Chairman Levin, Ranking Member Bilirakis, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.

GAO Contact and Staff Acknowledgements

If you or your staff have any questions about this testimony, please contact Melissa Emrey-Arras, Director, Education, Workforce, and Income Security Issues at (617) 788-0534 or emreyarrasm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this testimony include Will Colvin (Assistant Director), Brian Schwartz (Analyst-in-Charge), and Jeffrey G. Miller. In addition, key support was provided by James Bennett, Deborah Bland, Benjamin DeYoung, Alex Galuten, Theresa Lo, John Mingus, Corinna Nicolaou, and Michelle St. Pierre.

This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.