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Until the passage of the original GI Bill, federal student aid as we know it now essentially did not exist.¹ After the passage of the 1944 Servicemen’s Readjustment Act, known as the GI Bill of Rights, the federal government for the first time provided educational grants or scholarships to millions of veterans. The 1944 GI Bill is rightly remembered as one of the most effective social policy programs and government interventions in U.S. history, earning the sobriquet "The Greatest Legislation." By the fall of 1946, more than one million veterans had enrolled in American universities, doubling the size of the student population almost overnight.² In total, thanks to the GI Bill, more than 2 million World War II veterans went to college, and millions more were able to obtain low-interest loans to buy a home.

Yet what has been largely forgotten is that the GI Bill also led to widespread scandals and systematic abuses at for-profit schools, including at for-profit correspondence or home study schools. Mail-order correspondence courses, used primarily by high school and grade school dropouts seeking to improve their career prospects, were popular in the 1920s.³ But mail-order programs were largely eviscerated by the Depression and the movement to make high school education universal.⁴ Correspondence programs developed a reputation for misleading advertising, overblown job promises, and hucksterism, memorably captured by Sinclair Lewis in his 1922 satirical novel, Babbitt.⁵ However, up until the GI Bill, these programs faced little regulation, targeted adults without a high school diploma, and were not subsidized by the federal government. That all changed in December 1945, when Congress amended the just-passed 1944 law to allow veterans to use their educational benefits for correspondence courses and to raise the monthly subsistence payments to veterans that supplemented their tuition payments, to the point where the monthly subsistence payments exceeded the amount of unemployment benefits or wages that veterans could earn in some parts of the country.

In the five years that followed Franklin Roosevelt’s signing of the 1944 law, the total number of for-profit schools in the United States tripled, from 1,878 to 5,635.⁶ Thousands of new ones opened to serve veterans, and thousands more, ill-suited to provide an education, closed.⁷ Contrary to conventional wisdom, more veterans actually used their educational benefits to attend for-profit schools than went to four-year colleges and universities. And many of those programs utilized correspondence education. While 2.2 million vets went to college on the GI Bill, 2.4 million GIs used their educational benefits to enroll in trade and technical and business schools, with another 637,000 veterans taking correspondence courses.⁸

Correspondence programs developed a reputation for misleading advertising, overblown job promises, and hucksterism.

The abrupt explosion in the number of for-profit schools—the vast majority of which were heavily or entirely dependent on federal dollars—fed a simultaneous explosion in misleading advertising, predatory recruiting practices, sub-standard training, outright fraud, and even abuses by GIs themselves. Tens of thousands of veterans trained for jobs in overcrowded fields in which there were no job openings. GIs who wanted to collect their monthly subsistence checks but had no clear educational or occupational objective were allowed to switch willy-nilly from one field to another. And thousands of veterans signed up for recreational or avocational courses, many offered by correspondence, like bartending, personality development, dancing, and auctioneering. Others had the VA pay for TV repair courses and then dropped out of their courses as soon as they got their promised free television. In 1949 alone, nearly 550,000 veterans made course changes.⁹ Course and credit hours varied widely too. Bartending courses, offered in-person or by correspondence, ranged from 200 hours of instruction to seven months in duration.¹⁰

It didn’t take long before newspaper and magazine exposés about unscrupulous trade school owners and deceived GIs started popping up all over the country. The Saturday Evening Post ran a piece in 1946 headlined “Are We Making a Bum Out of GI Joe?” Other newspapers and magazines ran stories with headlines like “How Many Wrongs Make a GI Bill of Rights?” and “There’s a Shell Game at Every Turn for a Man with an Eagle on His Lapel.”¹¹ An article in ��DZ��������’s in 1948 concluded that while the Veterans Administration lacked the funds to staff some VA hospitals, "there has been plenty to pay for the training of ballroom dancers, bartenders, amateur photographers, amateur piccolo players, horseback riders and chicken sexers….we have squandered at least half a billion dollars supporting what in many instances is the greatest boondoggle of all time: the questionable Veterans’ Education programs."¹²

Then-chair of the education subcommittee of the House Committee on Veterans’ Affairs, Homer Ramey (R-OH), published his own piece in ��DZ��������’s a week later, noting that for-profit operators “have established schools that are highly questionable in character—schools in which are taught subjects that are of no benefit to the veteran-student, and that milk the federal Treasury of the taxpayers' funds without giving any worthwhile return, either to the veteran or to the public.”¹³ With lawmakers’ concerns growing, Congress banned the use of GI educational benefits for avocational or recreational courses, many of which were offered by correspondence, in 1948. The new law barred the VA Administrator from approving the enrollment of a veteran in “any bartending course, dancing course, or personality development course…in any photography course or entertainment course; or in any music course—instrumental or vocal—public speaking course, or course in sports or athletics such as horseback riding, swimming, fishing, skiing, golf, baseball, tennis, bowling, [and] sports officiating.”¹⁴

Later changes by Congress further narrowed the scope of schools and programs that could access GI Bill education benefits, including restrictions on training in occupations the state determined were overly crowded, a common problem for correspondence programs. Misleading advertising and solicitations from the new for-profit trade schools and correspondence schools were so widespread that the National Association of State Approval Agencies passed a sweeping resolution in 1949 urging states to take cooperative action to “prevent any advertising, in oral, written, or printed form, which includes statements, illustrations, implications, or omissions, tending to mislead the public and the veteran.”¹⁵

The prevalence of misleading advertising and fraud made it difficult for the VA and overwhelmed state approving agencies to distinguish between legitimate correspondence programs and mail-order diploma mills, schools that automatically dispensed degrees without requiring work or evidence of learning from students. In February 1950, the New York Times reported that “More than 1,000 questionable or outright fraudulent schools and colleges in this country are fleecing unsuspecting students of millions of dollars annually. At least 100 are nothing more than ‘diploma mills’.” According to the Times’ investigation, “A large proportion of the [questionable or fraudulent colleges] are correspondence schools and engage in false and misleading advertising to attract unwary students. Those enrolling in the courses receive promises of all kinds of college degrees as well as highly-paid jobs in government or private industry.”¹⁶

A House investigation found “there is no doubt that hundreds of millions of dollars have been frittered away on worthless training."

By 1950, both congressional leaders and President Truman had become critics of the for-profit sector. The previous year, Senator Elbert Thomas (D-UT), chairman of the labor committee, asked VA Administrator Carl Gray to prepare a report on education and training under the GI Bill. Gray’s 200-page study, released in January 1950, was a sharp indictment of the trade school and correspondence school industry, noting that “most of the problems encountered by the Veterans’ Administration since 1947 in the administration of the education and training program have occurred in connection with these new schools.”¹⁷ A subsequent report issued by a House select committee tasked with investigating education and training programs under the GI Bill found that many for-profit schools “offered training of doubtful quality,” “exploitation by private schools has been widespread,” and “many schools have offered courses in fields where little or no employment opportunity existed.” “There is no doubt,” the committee concluded, “that hundreds of millions of dollars have been frittered away on worthless training.”¹⁸

When Congress passed the Korean War GI Bill in 1952, lawmakers sought to curtail the abuses by correspondence programs and trade schools.¹⁹ That law made further changes to the eligibility of certain types of programs and attempted to cut down on programs that offered little value, mandating that veterans had to identify a specific educational, professional, or vocational goal and enroll in courses consistent with that goal. Even more consequential, it eliminated the system of paying benefits directly to postsecondary institutions, including proprietary schools, and instead provided a basic lump-sum monthly payment directly to student veterans to cover tuition, books, and educational supplies.²⁰ Due largely to the new restrictions, the for-profit sector stopped expanding and instead shrank rapidly. In 1952, more than 600,000 World War II veterans were enrolled in proprietary schools under the original GI Bill; by 1954, their numbers had fallen to about 150,000.²¹

In January 1955, President Eisenhower established a Commission on Veterans’ Pensions to study the question of what benefits should be offered to post-Korean War “peacetime” veterans, and appointed his friend, the famed general Omar Bradley, as chairman. The committee, which came to be known as the Bradley Commission, took 15 months to complete its report and commissioned several studies of veterans’ educational benefits. “The Government,” the Bradley Commission stated in its spring 1956 final report, “was overcharged for much of the training in schools below [the] college [degree-granting] level, particularly in profit schools.”²² Many veterans, the commission concluded, enrolled in courses in “occupational fields where the employment prospects were far from good,” and “much of the training in profit schools was of poor quality."²³

No one really knew, the commission pointed out, how many veterans landed jobs in their field of training after completing their courses. What was clear, however, was that the vast majority of veterans never graduated from their proprietary school programs. The Bradley Commission’s report noted that there was “no information on the number of veterans graduated from profit schools who were actually placed in jobs for which they were trained, but it was estimated in January 1951 that of the 1,677,000 veterans who attended profit schools, only 20 percent completed their courses.”²⁴ At for-profit correspondence schools, the completion rate was even lower. Of the 286,000 veterans who took training by correspondence in the five-and-a-half years following the passage of 1944 GI bill, just 30,600 of the veterans, or 10.7 percent, had completed their home study courses. “The low rate of completion,” a commission staff analysis concluded, “suggests that many of the courses taken were of little subsequent use to the veterans.” That finding was buttressed by a 1955 Census Bureau survey of 8,000 World War II vets which found that half of those trained by correspondence said they had not used their training “at all” in subsequent jobs.²⁵