Nationally, the University of Phoenix received nearly $1 billion from the new GI Bill over the last five years.

Credit: /CIR

UPDATE, Aug. 6, 2014: This story updates to include more information from the U.S. Department of Veterans Affairs about how it reached its decision.

Within days of news that California regulators had blocked enrollment of additional veterans in seven programs at the University of Phoenix’s San Diego campus, the federal Department of Veterans Affairs has stepped in and lifted the ban.

The VA said Monday that the about-face was based on new information provided by the for-profit campus, which contradicts facts gathered during an on-site state audit in May. A VA spokeswoman said the agency did not independently verify the new information before lifting the ban.

The California audit, conducted by inspectors from the state’s Department of Veterans Affairs, found that the campus had exceeded the 85 percent cap on the number of veterans enrolled in seven degree programs, including those in business, criminology and Web design.

The cap has been on the books since the Korean War, when lawmakers became concerned that fly-by-night trade schools were tailoring programs exclusively to receive GI Bill education funds.

The University of Phoenix did not respond to requests for comment, but in a statement posted on its website, Mark Brenner, chief of staff at the school’s parent company, the Apollo Education Group, said the company still has questions about “the way the May 2 state compliance audit has been handled,” but was “pleased by the Federal Department of Veterans Affairs’ rapid response to quickly clarify and remedy the situation for our veteran students.”

The 85 percent cap is one of the few regulations that schools must follow to qualify for GI Bill funds. Tom Tarantino, chief policy officer for Iraq and Afghanistan Veterans of America, said the fact that the cap was even an issue at the University of Phoenix raises concerns about improper targeting of veterans.

“You have to be really far afield to be violating that, given the small proportion of veterans in this country,” Tarantino said. “The fact that you are even close to violating it means there is something really below board here.”

When The Center for Investigative Reporting revealed the results of the state audit Wednesday, the University of Phoenix posted another statement from Brenner stating that only one of the seven programs exceeded the cap. For that program, a Bachelor of Science in organizational security and management, it said, “the University agreed voluntarily to close enrollment to VA students.”

The University of Phoenix also launched a vigorous social media campaign against CIR’s story, including sending 75 tweets disputing it from the school’s official Twitter account.

In a statement, Keith Boylan, deputy secretary at the California Department of Veterans Affairs, said his agency continues to stand by its audit, but said there is no dispute between the federal and state departments of veterans affairs.

The federal VA “reviewed new information” provided by the University of Phoenix and validated it, Boylan said, adding that, “CalVet considers the matter closed.”

In an email, VA spokeswoman Victoria Dillon said the agency reversed the state’s enrollment ban without returning to the campus to conduct its own audit. Instead, she said the decision was made after the for-profit school sent new figures by email.

“At this time, VA has no reason to doubt the validity of the data provided by the University of Phoenix-San Diego,” Dillon said. “However, VA will look further into the discrepancy between the data initially provided to CalVet and the additional information provided later.”

Federal law does not require that schools receiving GI Bill money be accredited or report whether veterans graduate or find jobs.

The overall graduation rate at the University of Phoenix’s San Diego campus is under 15 percent, according to the U.S. Department of Education, and more than a quarter of students default on their loans within three years of leaving the school.

In June, CIR reported that the school had received more GI Bill funding than any other brick-and-mortar campus in America, $95 million since 2009. Nationally, the University of Phoenix has taken in nearly $1 billion in GI Bill funding over the past five years.

This story was edited by Amy Pyle and copy edited by Sheela Kamath and Christine Lee.

Republish our articles for free, online or in print, under a Creative Commons license.

Aaron Glantz was a senior reporter at Reveal. He is the author of "Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream." Glantz produces journalism with impact. His work has sparked more than a dozen congressional hearings, numerous laws and criminal probes by the Drug Enforcement Administration, FBI, Pentagon and Federal Trade Commission. A two-time Peabody Award winner, finalist for the Pulitzer Prize, multiple Emmy Award nominee and former John S. Knight journalism fellow at Stanford University, Glantz has had his work has appear in The New York Times, Chicago Tribune, NBC Nightly News, Good Morning America and PBS NewsHour. His previous books include "The War Comes Home" and "How America Lost Iraq."