Oregon Community Colleges Battling Feds Over Allegations Flight Schools Were Overpaid Veterans Benefits

Two Oregon community colleges are suing the U.S. Department of Veterans Affairs over its efforts to claw back millions in GI Bill benefits that the department says it overpaid for students enrolled in helicopter and airplane flight training programs.

The lawsuits follow a long-running dispute between the VA and four Oregon community colleges’ flight schools, which the federal agency determined it had overpaid more than $10 million in veteran benefits.

The colleges’ plight was part of a larger national conflict over whether schools used veterans benefits judiciously to help former military members gain the credentials needed to get well-paying civilian jobs – or whether overpriced training programs unfairly enriched the private flight companies that schools often contracted with for services.

Reporting by the Los Angeles Times in 2015 revealed one flight school working with Southern Utah University was charging as much as $500,000 per student for training. Oregon schools, whose tuition and fees an aviation education expert characterized as reasonable, say their programs got snagged unfairly in the scandal’s wake.

The Oregon colleges have spent hundreds of thousands fighting the VA’s collection efforts. Portland Community College – where veterans once made up nearly 75% of flight students – stopped accepting veteran benefits for its aviation science program after it says VA regulations made it impractical to keep working with the department. The fight upended the lives of veterans in the program, one former student said, sparking mental health issues and forcing some to abandon their plans to become pilots.

“It was all pulled out from underneath us,” said former student Robert Cutter.

NATIONAL SCRUTINY

Flight programs came under congressional scrutiny after the LA Times’ damning exposés.

The VA set out to review every flight training program at a college or university, the Arizona Republic reported in 2016. Schools that had previously contracted with a third party for flight training had to change that process to remove private-pilot instruction, a VA spokeswoman told the newspaper.

Aviation instructors say the flight training programs are a draw for veterans who were exposed to planes or helicopters in the service. At Central Oregon Community College, 177 of the school’s 282 flight students are veterans.

Veterans can cover almost all of their aviation training costs at Central Oregon with government benefits, aviation program director and veteran Karl Baldessari said, and they step out of the program and into a high demand career: Boeing forecasts the global aviation industry is going to need 612,000 more commercial pilots in the next 20 years.

Central Oregon Community College trains airplane pilots for about $85,000 and helicopter pilots for around $100,000. At Portland Community College, flight instruction costs – which make up the bulk of program cost – are around $70,000 for airplanes and $78,000 for helicopters. Klamath expected its pilot program to cost between $70,000 and $80,000 when it launched, the Herald and News reported in 2014. And Lane estimates a more than $90,000 price tag for its aviation students.

“That doesn’t sound outrageous at all,” Sam Pavel, past president of the University Aviation Association, said of the Oregon program costs. It’s hard to gauge a uniform cost across different programs, Pavel said, but he’d expect airplane instruction to be in the ballpark of $80,000.

Pavel, who worked with flight programs in the Midwest and is now based in Washington, said he’s not heard of other colleges confronting the same issue that Oregon schools now face.

The four flight programs, based in Klamath Falls, Eugene, Bend and Portland, trace their dispute with the VA back to audits starting in 2016 and 2017, when the federal agency determined each school was overpaid GI Bill benefits. Klamath and Portland Community College lawsuits say audits by the VA in prior years found no major issues with the school’s collection of benefits for veterans. Spokespeople for Central Oregon Community College and Lane Community College echo that pattern.

The department asked Portland Community College for roughly $6 million in repayment, lawsuits say, Central Oregon Community College for $3.2 million, Klamath for $1.3 million and Lane for $275,000.

Alicia Moore, vice president for student affairs at Central Oregon Community College, says the issue wasn’t necessarily that the school overcharged students. Rather, the VA alleged the flight program was not strictly meeting department rules and therefore should not have been eligible for GI Bill payments, she said.

“After years of our programs being told they were satisfactory … all of the sudden the VA was finding multiple issues with not just Lane’s aviation program but the other colleges in Oregon,” said Brett Rowlett, spokesman for Lane Community College.

“The VA did a very poor job of relaying its expectations to institutions,” he added.

Lane gave the VA its money back, Rowlett said. But Klamath and Portland Community Colleges sued the department, asking federal judges to bar the VA from attempts to collect the debt until the schools are allowed to participate in an arbitration process. Central Oregon Community College settled a similar lawsuit with the VA and is winding its way through that arbitration process now.

College lawyers argue that the department mishandled the audit and debt collection process and targeted Oregon schools as a cost-saving measure.

VA spokesman Joseph Williams declined to comment on those allegations, saying that the department does not discuss ongoing litigation.

“VA takes seriously its commitment to provide oversight and protect the integrity of the GI Bill program … as well as to ensure good stewardship of the taxpayers’ dollars,” Williams said in an email. “VA’s process for assessing and collecting overpayments … remains constant.”

The Oregon schools have spent hundreds of thousands in this drawn-out legal battle. Central Oregon has paid more than $600,000 in legal fees, Moore said. Portland Community College has spent $114,600 in the last 10 months.

Nearly six years later, Central Oregon’s fight isn’t over. The school is waiting to hear the outcome of a hearing with the federal agency’s committee on school liability, which could either uphold or overturn the audit findings.

Klamath and Portland Community Colleges sued last year after the federal government withheld millions in pandemic relief from the schools to offset the VA debt. The schools have since gotten that money back, but they are asking a federal judge to force the VA to allow them to participate in the same dispute process as Central Oregon.

VA lawyers argue in court filings that the department does not have to allow the schools to participate in that arbitration process – but that it will allow Klamath and Portland Community College to do so. The department has asked judges to dismiss the schools’ suits.

The dispute extended beyond the flight programs. At the time of the audits, Oregon’s Higher Education Coordinating Commission was acting as the VA’s authorizing agency for programs eligible for veteran benefits. After a 2017 review, the agency told the higher education commission it was doing a “minimally satisfactory job,” in part because of “very large flight school overpayments.” Again in 2018, the VA told the commission that its work was “unsatisfactory.”

The commission pushed back on a number of the department’s complaints and submitted a corrective action plan. But the federal agency terminated its contract with the higher education commission before 2019 and now relies on the Oregon Department of Veterans Affairs instead.

VETS LEFT SCRAMBLING

Several of the flight schools had to temporarily suspend their aviation programs as they worked to get back in compliance with the VA regulations. Some Central Oregon students had to delay starting their flight programs as a result, Moore said. Lane Community College wasn’t able to serve veterans for about two years, Rowlett said.

Klamath, Central Oregon and Lane are again accepting GI Bill benefits for aviation programs. Treasure Valley Community College, in Ontario, also serves veterans in its flight program.

Portland Community College decided to stop accepting the benefits after a back-and-forth with the VA that left students reeling.

Robert Cutter, who started in the Portland aviation program in 2017, said from one moment to the next, veterans didn’t know whether the government would pay the GI Bill benefits that helped cover veteran students’ cost of living as well as flight training.

Veteran students “were sitting around doing nothing,” afraid to rack up expensive flight fees that might have to be paid out of pocket, Cutter said. He sold plasma to help his wife pay for bills when GI benefits were delayed and picked up a shift at Fred Meyer.

The financial concern put pressure on his marriage, and Cutter said he was so worried about a friend’s mental health he took the man’s gun away.

“I was depressed. All of my friends were depressed. We thought we were being abandoned by the VA. That’s always a joke in the military … But we never thought it would happen to us,” he said.

Cutter and school officials felt the VA made it exceedingly difficult for Portland Community College to comply with its demands, moving the goalpost when the school tried to address issues the department had identified.

Portland Community College ultimately withdrew its flight school from VA approval for GI Bill benefits, after spokeswoman Kate Chester says “increasingly stringent VA guidelines” made it “impractical to continue to offer the program in good faith.”

“This is a national issue related to how the VA and Congress want to fund (or not fund) training for veterans specific to aviation,” Chester said in an email. “Unfortunately, this is surfacing at a time when we have a national shortage of working pilots.”

Cutter managed to limp past the finish line, completing his program in three years instead of two and paying thousands out of pocket for his final checkrides for certifications. He’s worked as a skydive pilot and doing aerial surveys and currently flies jets for a charter company.

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Many of his peers quit the program, left their dreams of flying, and went off to work in other fields, he said. Others left for Arizona, Utah or elsewhere to finish their degrees, Chester said.

“The biggest impact was just the stress and the mental health,” Cutter said. “We had these promises, these guarantees, everything was looking bright and happy and it was all pulled out from under us.”

Sami Edge covers higher education for The Oregonian. You can send her feedback or story ideas at sedge@oregonian.com. This story was brought to you through a partnership between The Oregonian/OregonLive and Report for America. Learn how to support this crucial work.