Kentucky Attorney General Jack Conway announced at a news conference Wednesday in Washington, D.C., that a Web site designed to steer veterans to for-profit colleges must pay a $2.5 million settlement and turn over the site to the Department of Veterans Affairs.
The settlement stems from Conway's investigation of alleged deceptive recruiting practices by some for-profit colleges. It is part of an agreement with 20 state attorneys general that was filed Wednesday in Franklin Circuit Court.
Kentucky is scheduled to receive about $325,000 of the $2.5 million settlement.
QuinStreet Inc. operated GIBill.com, which steered veterans to mostly for-profit colleges that were clients of QuinStreet, according to information provided by Conway's office. The site led users to think it was sponsored by the U.S. Department of Veteran Affairs, Conway said.
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State attorneys general and consumer advocates have said that for-profit colleges increased their recruitment of veterans after Congress passed a robust GI Bill in 2008, making billions of dollars available to veterans and service members.
The influx of federal aid made veterans particularly attractive to the proprietary education industry. A recent report by a U.S. Senate committee showed that GI Bill funding at 20 for-profit colleges increased 683 percent from 2006 to 2010.
For-profit colleges must receive 10 percent of their overall funding from sources outside of federal financial aid, but money from the GI bill does not count toward that cap. That means if a school recruits veterans, it could get 100 percent of its funding from the federal government.
As part of the settlement, QuinStreet Inc. must turn over the domain name GIBill.com to the Department of Veterans Affairs and has agreed not to use any domain name that includes "GIBill." In addition, QuinStreet Inc. must clearly state on its other military-related Web sites that the sites are not operated by the Department of Veterans Affairs. It also must disclose on other education-related Web sites that schools listed on those pages are paid advertisers and that there are schools other than the ones listed that accept the GI Bill.
QuinStreet, which is based in California, operates 700 Web sites.
"This company preyed on our veterans who received educational benefits as a result of their military service to our country," Conway said. "The actions were unconscionable and purposefully drove veterans to for-profit colleges who were perhaps more interested in getting their hands on the federal benefits than in educating our soldiers and their families."
Conway subpoenaed more than a half-dozen for-profit colleges in Kentucky in 2011, seeking information about their student loan default rates, recruitment practices and job placements. The investigation was prompted after Conway's office received complaints from students at some for-profit colleges who said they went into debt and did not receive the degrees or job placements that were promised.
Conway now chairs a committee of state attorneys general that is examining the for-profit college industry.
Conway said Wednesday that investigations continue into possible improprieties by for-profit colleges.
He made the announcement with Illinois Attorney General Lisa Madigan; Scott Gould, deputy secretary of the Department of Veterans Affairs; Holly Petraeus, assistant director for Servicemember Affairs at the Consumer Financial Protection Bureau; and several U.S. senators.
"These new consumer protections will help ensure that veterans looking online to learn more about the GI Bill will find accurate information about the benefits they have earned through their service and sacrifices for our country," Petraeus said.
Conway said Petraeus' staff initially alerted the attorneys general to problems with GIBill.com.