This is dead on. I am a veteran currently going back to school for an engineering degree on the GI bill. When I got out of the service I didn't even consider going back to school, and just taught myself how to code and started working as a web developer. Once I made it to the point of working with other software engineers with formal educations in a large firm though, I realized the depths of my ignorance. I hit a wall that no amount of javascript bootcamps or rails tutorials could ever get me past. The fundamental knowledge of math and science that separates engineers from 'coders'.
I think the VA is absolutely doing the right thing here by not allowing code schools to take advantage of GI bill money. The industry does not need more coders, it needs more engineers. If these schools were legitimate they would be working in connection with established universities to provide accelerated ABET accredited degrees. You'll notice that the article posted mentioned nothing of the actual long term success rates of these programs, either.