The University of Phoenix has received more than $1.2 billion in GI Bill money since 2009. Credit: Adithya Sambamurthy/Reveal

Faced with growing opposition from veterans groups, ethics experts and five U.S. senators, the Trump administration today abruptly abandoned its plan to suspend a 50-year-old anti-corruption law that prohibits for-profit colleges from enriching Department of Veterans Affairs employees who oversee the GI Bill.

In an email to Reveal from The Center for Investigative Reporting, VA press secretary Curt Cashour said the agency had “received constructive comments” and was withdrawing the proposal “to allow for proper consideration of that valuable input.”

The VA had proposed waiving a federal law that prohibited its employees from receiving “wages, salary, dividends, gratuities” and services from for-profit schools that receive GI Bill funds. VA employees would also have been allowed to hold an ownership interest in such schools.

The change was scheduled to go into effect Monday, but after it was exposed by Reveal, opposition began to build. Five Democratic senators wrote to VA Secretary David Shulkin asking him to pull the rule.  A long list of veterans groups – including the American Legion, Vietnam Veterans of America and Student Veterans of America – followed suit.

“Such a waiver would foster a culture of corruption in the VA,” said Melissa Bryant, political director of Iraq and Afghanistan Veterans of America.

In an interview with Reveal, Walter Shaub, the former director of the Office of Government Ethics who resigned in protest in July, said he was among a number of good-government advocates preparing to file an official objection in the Federal Register. He noted that President Donald Trump once owned a for-profit real estate education program, Trump University, which was sued for predatory behavior.

“We have a president who entered into a $25 million settlement agreement over a lawsuit that his own university defrauded its students,” Shaub said. “It tells you something about what may be motivating him.”

Shaub said the Trump administration likely saved itself from costly litigation by pulling the regulation when it did, as advocates would have taken the government to court, arguing that the Constitution does not allow the executive branch to waive in total a law passed by Congress.  

After the VA’s announcement, veterans groups expressed cautious optimism.

Carrie Wofford, president and director of Veterans Education Success, which has bailed out veterans defrauded by for-profit schools, said she was “pleased the VA listened to the concerns of military and veterans organizations.” She added that she hoped the VA “would consult with veterans organizations and ethics experts on any revised proposal.”

At the VA, Cashour declined to say whether the department might come back with a more narrowly crafted rule aimed at the anti-bribery statute.

Aaron Glantz can be reached at aglantz@revealnews.org. Follow him on Twitter: @Aaron_Glantz.

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."