Donna Shalala Wants to Close GI Benefits Loophole Used by For-Profit Colleges

A South Florida congresswoman with a great deal of experience in higher education is looking to close a loophole proprietary colleges use when it comes to federal funds, including GI benefits.

Freshman U.S. Rep. Donna Shalala, D-Fla., who was president of Hunter College and the University of Miami and the chancellor of the University of Wisconsin, is backing the “Defending All Veterans in Education (DAVIE) Act” which, her office insisted, “closes the GI Bill loophole in federal law that allows for-profit colleges to take advantage of veterans and servicemembers.”

Shalala introduced the bill on Wednesday and paired up with fellow Democrat U.S. Reps. Gil Cisneros of California, Chrissy Houlahan of Pennsylvania and Seth Moulton of Massachusetts to champion the legislation.

“Currently, for-profit colleges must operate under a 90/10 rule that requires these schools to receive no more than 90 percent of their revenue from federal student aid. However, veteran educational assistance through the GI Bill and DOD erroneously falls into the 10 percent of revenue that must come from non-federal sources,” Shalala’s office noted. “The DAVIE Act would close this loophole by reclassifying GI Benefits as federal student aid that must count towards the 90 percent portion of the 90/10 rule. In addition, the bill adjusts the ratio to 80/20 to ensure that these institutions are truly sustainable and able to earn revenue through other sources, such as employers, scholarship endowments, or students willing to pay tuition.”

“Current federal laws permit bad actors in the for-profit education industry to take advantage of our veterans,” said Shalala on Wednesday. “It is unacceptable and un-American that some for-profit institutions continue to use our veterans’ hard-earned benefits to line their own pockets. We need to ensure veterans and GI Bill recipients do not fall victim to the predatory recruitment tactics of low-quality institutions that see them as little more than the profits they provide. My bill protects our veterans from these dishonest schemes.”

Shalala pointed to a host of proprietary schools including ITT Tech, schools run by Career Education Corporation and Education Management Corporation, Argosy University and the Art Institutes which all closed despite receiving more than $2.5 billion in funds from veterans who used their GI benefits–leaving students without degrees, with classes that often did not transfer to other schools and heavy debts.

“For-profit institutions prey on veterans by making false promises about the quality of education they offer. However, even when GI Bill recipients manage to graduate from these schools before they close, they often find that their degrees are not respected and they do not have the skills they need to transition to civilian life,” Shalala’s office insisted.

“Scamming America’s veterans to make a quick buck is about as unpatriotic as it gets,” said Moulton who is running for the Democratic presidential nomination. “I’m a capitalist, but for-profit colleges and universities have shown they’re grossly incapable of regulating themselves. It is long-past time for Congress to step in so veterans receive college degrees, not huge bills, when they use their GI Bill benefits.”

“It is unacceptable that for-profit educational institutions are allowed to prey upon the hard earned benefits of our veterans with empty promises of a quality education and skills for a successful civilian life,” said Cisneros. “As a Navy veteran and education advocate who benefited from the G.I. Bill, we need to ensure our veterans receive the best education possible and are not taken advantage of simply because they are eligible for this great benefit they earned through their sacrifice for our country.”

“These brave men and women served our country,” said Houlahan. “There is no excuse for any educational institution to partake in disingenuous and predatory schemes that harm our veterans who are looking to build their lives as civilians. I remember leaving the Air Force, returning to school to continue to gain marketable skills, and then transitioning back to civilian life. What these colleges are doing goes against our American values, and I’m proud to co-lead this legislation that will protect our veterans.”

The bill has been endorsed by a host of veterans groups including Military Officers Association of America (MOAA), Association of the Unites States Navy (AUSN), American Veterans (AMVETS), High Ground Veterans Advocacy, Florida Veterans for Common Sense (FLVCS), Military Child Education Coalition (MCEC), Military Veterans Advocacy (MVA), The American Legion, TREA: The Enlisted Association, Wounded Warriors Project and Veterans for Common Sense (VCS).

U.S. Rep. Debbie Mucarsel-Powell, D-Fla., is cosponsoring the bill which was sent to the U.S. House Education and Labor Committee this week. So far, there is no version of the bill in the U.S. Senate.


Kevin Derby can be reached at

Kevin Derby
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