Melissa Joskow / Media Matters

Veterans groups have been asking Congress to close a loophole in the GI Bill that enables for-profit colleges to exploit veterans. The main lobbying group of the scam-plagued industry is fighting back and has recruited Fox News host Pete Hegseth to support their cause. Hegseth has denied that for-profit schools have preyed on veterans, attacked veterans groups as being “really drunk on the swamp,” and said he could potentially lobby President Donald Trump on the issue.

Hegseth also wrote a FoxNews.com opinion piece in support of for-profit colleges, saying they are “improving the lives of veterans every day!” But Fox News didn’t disclose that Hegseth is working with the lobbying group. 

Hegseth is a co-host of Fox & Friends Weekend. He also regularly advises Trump on military issues, including lobbying the president to pardon accused and convicted war criminals. Trump at one point last year reportedly considered Hegseth to serve as secretary of Veterans Affairs. 

Career Education Colleges and Universities (CECU) is a trade association that serves as the main lobbying organization of the for-profit college industry. The group spent $362,000 lobbying the federal government in 2018. 

The for-profit college industry has been plagued by reports of scams and fraudulent advertising that lead to many students ending up with essentially worthless degrees and large debts. Multiple states have taken action against the industry while the Trump administration has protected it. As NBC News reported in April, the Obama administration had “created new rules intended to help rein in the worst-performing schools and to protect taxpayer dollars. … Now, the Trump Administration is trying to overturn those rules — and veterans and low-income Americans are the most at risk. Education Secretary Betsy DeVos has begun a months long process to unwind the Obama-era rules, easing oversight of for-profits’ use of tax dollars and protections for defrauded students.” 

The industry has also exploited veterans over the years. In a February New York Times op-ed, Veterans Education Success President Carrie Wofford and Student Veterans of America Executive Vice President James Schmeling explained that for-profit colleges target veterans because they “milk a federal loophole that allows them to count G.I. Bill benefits as private funds”:

Why are veterans the targets? Because for-profit colleges milk a federal loophole that allows them to count G.I. Bill benefits as private funds, offsetting the 90 percent cap they otherwise face on their access to taxpayer-supported federal student aid. Nearly two dozen state attorneys general have said this accounting gimmick — known as the “90/10 loophole” — “violates the intent of the law.”

Hundreds of for-profit schools are almost entirely dependent on federal revenue, and if the 90/10 loophole were closed, they would be in violation of this federal regulation. Taxpayers, in other words, are largely propping up otherwise failing schools.

In December, a damning Department of Veterans Affairs internal audit estimated the risk of G.I. Bill waste was exceptionally high at for-profit schools, which received over 75 percent of improper G.I. Bill payments. The report highlighted the schools’ deceptive advertising campaigns used to recruit veterans and warned that the government will waste $2.3 billion in improper payments over the next five years if changes are not made to reel in the abuse.

As a result of systematic problems, veterans groups have urged Congress to close the 90/10 loophole. 

In response, CECU recently formed Veterans for Career Education, which it claims “supports the right of veterans to use their earned education benefits to gain career skills at the college or institution of their choice.” CECU has also recruited Hegseth, an Army veteran, as a public face of its campaign. 

Hegseth gave a June 3 speech in New Orleans, LA, for CECU, during which he announced that he was working with the organization and attacked critics of the for-profit education industry.

Hegseth said that he’s “so excited to be working with” Michael Dakduk, a Marine Corps veteran who is CECU’s executive vice president, director of government relations, and a lobbyist for the organization. Hegseth later said: “I’m all-in on this effort. I cannot wait to get even more involved, go to Washington, be with this organization, be with the vets, travel around the country, put pressure on the folks that deserve to have pressure put on them.” 

During his speech, Hegseth offered an unapologetic defense of the for-profit schools industry, stating, “The fact that profit is made only makes these schools better”:

PETE HEGSETH: There’s a condemnation of profit. Since when did profit become a dirty word? There’s a belief that if you’re making money that’s a bad thing. I think the fact that profit is made only makes these schools better because it means you treat your students -- and having talked to a number of you before I came up here, there’s a beloved feeling toward the students you have in your institutions. They’re not just students, they’re also customers and as customers, you want to serve and meet their needs just like you want to meet the needs of the companies that would hire them in the future. And when you treat someone like a customer, it means you want them to come back. Or you want them to refer new customers to you. There’s an incentive. And if you look -- I’m going to talk a little bit about the VA and my fight against the VA and the VA bureaucracy. When bureaucracies and places treat you like a number, that’s when you are treated poorly because there’s no accountability to treat you like a customer. Profit is a good thing when channeled properly, and I’m not talking about the few cases where folks are messing around and not doing the right thing. Everybody knows that can happen. There’s bad actors in any industry, in any place. That’s not what we’re talking about here. 

Hegseth later claimed that “some of these extreme leftists, Democrats, unfortunately at this point, they’ll say that these college degrees are mediocre, worthless, that schools prey on vets. These are direct quotes. And you and I both know that is just not true. I can’t get involved in something that I don’t fundamentally believe in.”

He criticized veterans groups, claiming, “There are a lot of veteran organizations in Washington that say they support vets, but they also -- they really just want to get invited to the cocktail parties. They really just want to be loved by both sides. They’re really drunk on the swamp and the power and the access they have there, and they’ve forgotten about all the guys at the VFW post level or the Legion post level who are doing those jobs throughout America. They’re not the ones they serve anymore; it’s the special interests in Washington that they serve.” 

Hegseth spoke about his relationship with Trump, stating that he thinks “if anything were to ever pass in the House, in the Senate right now that restricted veterans choice it would get the fastest … veto stamp or pen you’ve ever seen. So, right now you've got a president that would veto the bad stuff. And if he ever gave me a call -- and sometimes he does -- I’d tell him that.” 

Hegseth also wrote a June 25 FoxNews.com opinion piece defending for-profit colleges, writing: “I’ve met these veterans. I’ve met these college administrators. Nobody is being duped. In fact, to the contrary, these schools are improving the lives of veterans every day!” He additionally attacked Rep. Donna Shalala (D-FL) for introducing legislation seeking to end the 90/10 loophole and criticized Democratic presidential candidates for allegedly “targeting veterans’ educational choices.” The piece did not mention Hegseth’s ties to CECU.

It’s not immediately clear whether the multimillion-dollar lobbying organization is compensating Hegseth for his work. CECU did not respond to a request for comment. But the organization also worked with commentators Newt and Callista Gingrich -- the latter of whom is now the U.S. ambassador to the Vatican -- and compensated at least Callista. According to her financial disclosure report, the organization paid her an amount “exceeding $5,000 in a year.” 

Hegseth’s work on behalf of the for-profit college industry is another example of how Fox News has held the host to a low standard. The network has allowed Hegseth to keynote numerous Republican fundraisers and receive compensation for the speeches. Hegseth also repeatedly interviewed then-2018 Michigan Senate candidate John James on Fox News despite appearing with him at one of those fundraisers. (James is running for U.S. Senate in 2020.)