This story was produced by Reveal from The Center for Investigative Reporting, a nonprofit news organization based in the San Francisco Bay Area. Learn more at revealnews.org and subscribe to the Reveal podcast, produced with PRX, at revealnews.org/podcast.
Sen. John McCain unloaded on Reveal from The Center for Investigative Reporting and the Defense Department in a Senate Armed Services Committee hearing today, accusing the Pentagon of a “gross abuse of power” when it placed the for-profit University of Phoenix on probation last year.
“This hearing is about accountability,” McCain, R-Arizona, said in his opening remarks, “because if the University of Phoenix could be singled out in this flawed and suspect way, this indicates a deeper failing of the Department of Defense that requires oversight of this committee.”
For two hours, McCain and his colleagues grilled officials in an otherwise empty chamber. The hearing focused on the Pentagon’s treatment of the for-profit college, which was the focus of an investigation into predatory recruitment practices by Reveal and PBS NewsHour.
The Department of Defense subsequently launched its own investigation, confirmed our story’s findings and barred the University of Phoenix from military bases around the world for three months until outstanding issues could be resolved.
At the time, the Pentagon’s action drew praise from consumer advocates and veterans groups, including Iraq and Afghanistan Veterans of America, Student Veterans of America and Vietnam Veterans of America, who joined in a letter to then-Defense Secretary Ash Carter, thanking him for taking action to “protect service members from deceptive recruiting, including surreptitious recruiting on military installations.”
But throughout today’s hearing, McCain, who is the committee’s chairman, cast the Pentagon’s action as the sort of bureaucratic overreach that he hopes will end after Donald Trump takes office in January.
“This kind of abuse of power is something that I hope in a new administration will be totally unacceptable,” McCain said.
McCain also said he hoped Trump – who earlier this month settled multiple lawsuits claiming fraud at the now-defunct for-profit Trump University for $25 million – would consider rolling back an executive order by President Barack Obama that the University of Phoenix was found to have violated. The order was designed to prevent members of the military from being unfairly targeted by for-profit colleges.
In an extreme example that Obama said “should never happen in America,” recruiters from one college were caught enrolling Marines from a medical unit at Camp Lejeune, North Carolina, with head injuries so severe that they did not know what courses they were taking.
Other Republican senators suggested this could be the first of many hearings targeting not the for-profit sector, but the enforcement actions against it.
“The tuition assistance program is far too important to lack accountability and oversight,” said Sen. Ted Cruz of Texas – oversight that he said should be targeted at “protecting freedom of choice of our servicemen and women.”
“At what point are we overregulating?” asked Sen. Dan Sullivan of Alaska. “Are we to the point with this program where we are harming the people we are supposed to benefit?”
As an industry, for-profit colleges are known for low graduation rates and high rates of student loan defaults. According to the U.S. Department of Education, the University of Phoenix’s graduation rate currently is 17.5 percent.
Throughout the hearing, McCain argued that the Pentagon had perpetrated a “gross and grave injustice” against the for-profit college, condemning Reveal and the Defense Department for causing the stock price of the University of Phoenix’s parent company to plummet from $16 a share when our investigation was published last June to $6 a share after the Pentagon put the school on probation in October 2015. (It now is trading at $9.50.)
The Arizona senator grilled a panel of three Defense Department officials who testified, rebuking them for not reaching out to the University of Phoenix before punishing the school for breaking the law.
Pentagon officials stood by their decision to place the school on probation but said they regretted not tipping off the for-profit college.
“The process was crappy,” said Peter Levine, acting undersecretary of defense for personnel and readiness.
Levine’s top deputy, Stephanie Barna, told senators that the department already was crafting new regulations that would require such notice be granted in the future.
But McCain, who counts the University of Phoenix’s parent company among his top contributors, was not satisfied. (Officials from Apollo Education Group gave him $10,000 in the most recent election cycle.)
“I truly hope we will never see anything like this again from the Department of Defense,” he said. “But as long as I am chairman of this committee, there will be accountability.”
Aaron Glantz can be reached at email@example.com. Follow him on Twitter: @Aaron_Glantz.