I-Team: Veterans claim colleges are exploiting them

For-profit colleges accused of unethical practices

Veterans and active duty military members put their lives on the line in service to the country. When they get home, the Post 9/11 G.I. Bill promises to help pay for college.

But veterans who spoke with the I-Team said they’re being exploited by one of the biggest for-profit college companies in the country.

When Grant Shaffer left the Marines after two tours in Iraq, he said he wanted to learn to design video games. He claimed recruiters at the Art Institutes convinced him they’d teach him the skills he’d need to get a job. He said he attended both the Art Institute of Washington and the Art Institute of Pittsburg online.

But Shaffer said the classes were outdated and too basic. He claimed, in one of his classes, the school wouldn’t even pay for the required computer program.

“You’re trying to teach a college course with a program you’re requiring, but the instructor, he doesn’t have access to it,” Shaffer said.

Grant said he left the Art Institute after a year and a half and was no closer to becoming a game designer.

“Nothing that I ever learned at the Art Institute do I think I can apply to the real world,” Shaffer said.

Two previous I-Team investigations exposed accusations of unethical practices at the Art Institutes and three other major colleges: Argosy University, South University, and Brown Mackie College. All of these schools are run by EDMC, a for-profit company with 110 campuses, including 4 in the Tampa Bay area.

Critics say EDMC preys on veterans and active duty military to cash in on the federal aid they get from the G.I. bill. From 2009 to 2011, EDMC received $173 million dollars from veterans.

It’s often referred to as the “90-10 rule”. For-profit colleges aren’t allowed to get more than 90% of their funding from federal dollars. But federal aid from veterans doesn’t count. It creates a big financial incentive for for-profit colleges to recruit veterans.

The I-Team reviewed internal EDMC e-mails from a 2012 U.S. Senate HELP Committee report on for-profit colleges.

In May of 2009, President of Brown Mackie Colleges Danny Finuf wrote, “Never give up especially when dealing with important issues such as 90/10. The VA (Veterans’ Affairs) is a terrific opportunity.”

“I was taken for a ride,” said former Art Institutes student Michael DiGiacomo.

DiGiacomo is a veteran and former Art Institute student who also claims the education didn’t live up to the promises.

“I believe that they are basically using us a funnel to get access to the federal aid,” DiGiacomo said.


The Art Institutes, Argosy University, Brown Mackie College, and South University span 110 campuses and 135,000 students. They're all operated by one of the largest for-profit college companies in the country: Education Management Corporation (EDMC). In a 5-month investigation, the I-Team is exposing alleged unethical practices at EDMC, including accusations they lie to prospective students, forge job placement numbers, and exploit veterans, all in an effort to collect more than $1.8 billion a year in taxpayer money.

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EDMC denies they recruit veterans for financial gain. They say only 6% of their revenue comes from military aid programs, and only 10% of their students are veterans. EDMC representatives declined an on-camera interview, but Anthony Guida, Senior VP for External Affairs, said in a written statement:

"Many returning veterans deal with a variety of issues when re-entering civilian life and Education Management's schools are well-situated to assist enlisted military and veteran students through online programs, academic support, and tutorial learning centers."

You can read the complete EDMC response to our investigation below.

Earlier this month, Senator Dick Durbin (D-Illinois) proposed a bill to close what he calls the “90/10 loophole”. He spoke with I-Team investigator Michael George from Washington, accusing EDMC of exploiting veterans.

“They really think they’re above it all. That they can continue to receive literally billions in federal money, provide worthless diplomas to veterans and other students, run them deeply into debt,” Sen. Durbin said.

Grant Shaffer says he now has a job in a different field. We asked him why he decided to share his story.

“Because I was in the Marine Corps. Someone needs to take a stand. Someone needs to bring to light what’s going on,” Shaffer said.

Attorneys General in 22 states and 10 veterans groups have asked Congress and the President to close the “90/10 loophole”. EDMC argues changing the law would take away opportunities from thousands of veterans who hope to attend college.

The complete response to our investigation from EDMC’s Senior VP for External Affairs, Anthony Guida, reads:

 “Education Management is committed to ensuring that the experience for veterans and active military personnel enrolled at our schools is the very best it can be. In fact, we recently aligned with veterans’ service organizations in support of H.R. 4057, to provide transparent disclosure, support and choice to veterans in their pursuit of higher education.

Many returning veterans deal with a variety of issues when re-entering civilian life and Education Management’s schools are well-situated to assist enlisted military and veteran students through online programs, academic support, and tutorial learning centers.  It is worth noting that our Brown Mackie Colleges were honored as a 2012 “Military Friendly School” by GI Jobs Magazine, which recognized the top 25 percent of colleges doing the most to embrace America’s veterans in higher education.

As of October 2012, approximately ten percent of Education Management’s 132,000 students were active military or veterans, and only six percent of net revenue in fiscal year 2012 was derived from military-related financial aid programs.  Further, while we have considered many different programs over the years, the fact is that less than one percent of total revenues are directed toward outreach to prospective students from the military. 

Under the Post-9/11 GI Bill, veteran’s benefits together with an institution’s participation in the Yellow Ribbon Program are designed to cover 100% of student-veteran’s tuition and fees.  Because of this, any effort to change federal law to count GI Bill aid along with Title IV aid under the 90/10 Rule would force high-quality private sector institutions to shift away from providing access to the military student population and deprive veteran students of the flexibility to pursue a higher education at the school of their choice.”






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