Assistant Director for Servicemember Affairs
Consumer Financial Protection Bureau
Higher Ed Day
DoD Worldwide Education Symposium 2012
July 25, 2012
Good morning, everyone! I’d like to thank Carolyn Baker, both for the introduction and for her part in my being invited to come here today and speak to you. It’s great to see DoD education officers from around the globe all gathered here in Vegas, so I only have to give this talk once! And having it here in Vegas is kind of appropriate, too, as it points up the fact that choosing a college should not be like throwing your money into the nearest slot machine and hoping it pays off big.
So, to begin at the beginning, for those of you who may not know me, I am the head of the Office of Servicemember Affairs at the Consumer Financial Protection Bureau, or CFPB. I’ve been in this job now for a year and a half – hard to believe it’s been that long! I’m a lifetime military family member, as you might have guessed by my last name, so I have a lot of personal knowledge of the military community to draw on. I also spent 6 years at the Better Business Bureau setting up and running their national BBB Military Line program from 2004 to 2010. That job was a great education for me on the consumer-financial challenges facing the military community, since about 55,000 military complaints per year come in to the BBB. And while I was there we developed a number of interactive financial-education workshops to address some of the problem areas we identified – and a number of military installations are still having the BBB teach those workshops as part of the financial training they give to servicemembers.
Based on my past experience, in January 2011 I was offered the job of setting up and running the Office of Servicemember Affairs at the CFPB. The CFPB was established by the Consumer Financial Protection Act of 2010 – a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act – and the role of my office is specifically described in the statute. I have three overall missions I’m supposed to accomplish: to see that military personnel and their families receive a strong financial education so they can make better-informed consumer decisions; to monitor their complaints about consumer financial products and services – and responses to those complaints; and to coordinate the efforts of federal and state agencies to improve consumer-protection measures for military families. The Consumer Financial Protection Act defines “servicemembers” as active-duty, Reserve or National Guard and their families, by the way, but my definition includes retirees and veterans and their families, too. The CFPB serves all consumers and I feel that my office should serve all who have worn the uniform – and their families.
When I got to the CFPB I had a pretty good knowledge of many of the consumer issues that were impacting military families: indebtedness, expensive payday and installment lending, car-buying challenges, debt-collection problems and internet scams, to name a few. But I also felt that it was important that I get out into the military community, tell them about my office and its mission, and then hear first-hand from them what they would identify as the most challenging consumer-financial issues that impact them.
So I embarked on a series of travels that have taken me to about 37 bases or headquarters, including 15 different National Guard units, where I’ve conducted roundtables and town halls. Although I often heard about the issues I mentioned, I was surprised to hear at nearly every stop about the challenges that servicemembers and Education Services Officers were facing when it came to decisions about where to spend hard-earned GI Bill and Tuition Assistance benefits. Here are some of the stories that I heard:
- An active-duty military spouse at Fort Campbell, Kentucky, told me that she was attending a “military-affiliated college” (she wasn’t; it was a for-profit school with no official military status, but obviously the recruiter had given her that impression). After she filled out an interest form she was called 5-10 times a day until she enrolled. But when she had trouble logging on to her online class, she couldn’t get anyone from the college to help her. She failed the class due to lack of access but was charged the full fee anyway.
- National Guard education officers in Ohio and North Carolina told me they are besieged by for-profit colleges desiring access to the troops. They noted that if they hold a job fair, over half the tables may be for-profit colleges, and that servicemembers may see a school’s presence at a job fair as an implied promise that you will get a job if you graduate from that school.
- A veteran at a forum I attended in Chicago, Illinois, had used up her benefits and incurred $100,000 in student-loan debt for Bachelor’s and Master’s degrees from a for-profit college, but was unable to find an employer who was interested in her degrees. When I met her she was still working at the same low-paying job she had before she went to college. Having seen her experience, her daughter was thinking of dropping out of college, and she didn’t know whether she should encourage her to keep going or not.
- At Nellis Air Force Base here in Nevada, an airman raised her hand at a recent town-hall meeting to say that she was one semester away from graduating from a for-profit college, but now her school was running into accreditation issues and she didn’t know what to do.
- Also in Nevada, a regional VA representative whose job is to assist veterans who have PTSD and Traumatic Brain Injury told me that she had tried unsuccessfully to help some of her veterans who didn’t even remember that they had signed up for college classes, but were being billed for the full cost of tuition.
- And at Joint Base McGuire-Dix-Lakehurst in New Jersey, I discovered that a military spouse who was employed by a for-profit college had a regular standing appointment at the Wounded Warrior barracks to provide educational counseling – the only college rep with that access.
I raise these stories because I know how many of you in this room are out there dealing with these issues every day, and I suspect many of you have stories of your own to tell. GI Bill and Tuition Assistance are very valuable benefits, and those who qualify for them have become the target of very aggressive recruiting tactics. An amendment to the Higher Education Act in 1998 specified that for-profit colleges could only get 90% of their revenue from federal education money. But, unfortunately, under the law federal education money means funds from Title IV programs, and GI Bill and Tuition Assistance are not Title IV. That puts them squarely into the 10% revenue category that for-profit colleges need to fill, and that fact has led to servicemembers being chased after and even deceived as they prepare to make one of the largest consumer decisions they will ever make: where to go to college and how to pay for it.
So, what can be done? I’d like to talk a bit about how the CFPB can help and the steps we’ve already taken.
As I mentioned, CFPB was created by the Consumer Financial Protection Act of 2010 in the wake of the economic meltdown, and we officially opened our doors a year ago last week, on July 21, 2011. Our goal is a consumer-finance marketplace where customers can see prices and risks up front and where they can easily make product comparisons; where no one can build a business model around unfair, deceptive or abusive practices; and where the market works for American consumers, responsible providers, and the economy as a whole.
The CFPB has the power to write rules for over 18 different federal consumer financial laws and to supervise and enforce those laws with respect to a whole range of institutions that provide financial services. We have also been granted authority to supervise private student lenders. If we find that companies are engaging in unfair, deceptive, abusive or discriminatory acts or practices we can sue them. We also conduct research and issue regulations and other guidance to ensure fairness, transparency and competition in markets for consumer financial products and services. And we provide consumer education and assistance, as well, to include receiving and responding to complaints.
Congress chose to add some special offices to the CFPB to serve specific portions of the population. I told you about my office – the Office of Servicemember Affairs – but we also have an Office for Students, and we have worked extensively with them on military education issues. The Office for Students has both a veteran and a currently-serving Reservist on its staff, so I don’t have to tell them about military issues – they get it. The head of that office, Rohit Chopra, is here in Vegas today, as well, and you’ll be hearing from both of us at a breakout session later on.
So anyway, here are some of the steps we’ve taken when it comes to military education issues, some of which I think you may have already heard about:
- We’ve worked with state Attorneys General to tackle deceptive college lead-generation websites, like GIBill.com. GIBill.com was typical of a number of websites that we ran across while doing research on GI Bill issues. It existed to drive traffic to the colleges that paid for the site, but certainly didn’t make that obvious to visitors. Instead, it presented itself as an official-looking military site that would give unbiased information on GI Bill benefits. GIBill.com was convincing enough that a number of people actually emailed specific GI Bill claim questions to it, including giving personal information such as Social Security numbers. The AGs, led by Attorney General Conway of Kentucky, filed suit against the company that owned it, Quin Street, and got it to agree to monetary penalties, promise to change all its GI-Bill-related sites, and give the URL GIBill.com to the VA. When you leave here today, type GIBill.com in your browser and you’ll see a very different message than the one you would have gotten a month ago.
- Also, on April 27th I was honored to accompany the President and the First Lady to Fort Stewart, Georgia to watch the President sign an Executive Order establishing principles of excellence for educational institutions serving military personnel, veterans, and their families. The Order directed the Departments of Defense, Veterans Affairs, and Education, in consultation with the CFPB and the U.S. Attorney General, to take steps to help servicemembers, veterans and their families get the information they need about the schools where they spend their education benefits. The Order also strengthens oversight and accountability within the federal military and veterans’ educational benefits programs. And the CFPB is currently working with groups from the above agencies to see that the Order is implemented in a way that best serves our military and veterans.
- We’re working to ensure better transparency, so servicemembers and veterans will find it easy to see what they are getting in a school. We aim to give them user-friendly tools to make it easy to compare schools and make an informed decision about which one is the best fit for their future plans, rather than choosing a school because of slick marketing or claims of being “most military-friendly.”
- We’re also working to ensure there is a place for servicemembers and, in fact, all students, to complain about schools that they believe are violating the law and that those complaints can be seen by federal, state, and local enforcement so they can investigate and potentially take action.
- I would be remiss if I didn’t mention that CFPB’s Office for Students, through its “Know Before You Owe” project, has done a lot of work to ensure that prospective students can determine the cost of their college degree in advance and can compare financial-aid offers from various institutions. A “financial aid shopping sheet” that includes military benefit information was developed and a beta version was posted on our website, ConsumerFinance.gov, encouraging visitors to give us suggestions on how to improve it. And we’ve been working with the Department of Education to develop a final version. Students can also find on our website a Student Debt Repayment Assistant that can help them learn about their options when repaying their education loans.
Now that I’ve talked about what we’ve been doing, I’d like to talk a little about what you can do as Education Officers. First of all, keep informed on the new tools and complaint portal that are being addressed through the Executive Order and encourage servicemembers to use them once they are available.
Continue to hold the line against indiscriminate access to your installation or your armory for college marketers who might be trying to recruit students. The Department of Defense is working on revising the DoD Rule on Commercial Solicitation to make that job a little easier for you. Keep in touch with your JAG so they can let you know as the rule evolves, and talk with your MWR Director and Garrison Commander if you have concerns about who is reserving tables at your job fairs and who is sponsoring events on base.
Here are some suggestions on questions to ask your students and the schools that want to come onto your base or recruit your servicemembers.
- Ask how many students take out additional debt beyond using their military benefits. Ask what their student-loan default rates are. Ask how many students take out private student loans.
- Ask them about their accreditation and whether they are sure it is accepted for the jobs they tout.
- Ask if their credits transfer to other schools.
- Ask them the percentage of their students who find employment in the field they studied for.
- Ask how many students graduate from the program they started.
- Ask how many actually sit for the licensing exam in the vocational program they start. Ask them how many pass.
- Ask how many career counselors they have to serve their students.
And, finally, be outspoken if you feel like something is wrong.
- File a complaint with us at ConsumerFinance.gov and/or reach out to your state Attorney General. Push complaints up your chain of command.
- The VA, Department of Justice, Department of Defense, Department of Education and the CFPB all are working on this issue and want to help. So do your state law enforcement officials.
- But, unless we hear from you, we will continue to hear the stories that none of us like to hear, about servicemembers, veterans, and their family members who have spent all their military benefits, possibly added on a pile of private student loan debt, and still haven’t gotten a degree that will set them up for success when they leave the military.
To close, military Tuition Assistance and GI Bill are outstanding benefits that can create a life-changing opportunity for our military families. We want to see our military personnel replicate what happened after World War II, when servicemembers came home, went to college on the GI Bill and became the engine that drove our economy to decades of success. But for that to happen we need to make sure that servicemembers are getting a valuable education at a reasonable price and are not being co-opted by expensive schools built on a business model that sees them as dollar signs in uniform, to be marketed to and then abandoned once they have bought the product. I think with the combined efforts of all of us in the room along with the federal and state agencies that have taken on this issue, we can equip our military families with the education they need to succeed in the 21st-century economy.
Thank you very much.