July 26, 2022
Chief among the proposals is eliminating a loophole that excludes military and veterans’ education benefits from the 90/10 rule, which prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. Veterans groups say for-profit colleges aggressively recruit military members to circumvent the rule. The Government Accountability Office (GAO) found nearly a third of GI Bill tuition benefits went to for-profit schools in 2017.
A bipartisan group of congressional lawmakers secured a provision in the 2021 American Rescue Plan to close the loophole, delaying implementation of the change by two years. That gave the Education Department time to negotiate the rules with a panel of higher-education experts.
Under the proposed rules, for-profit schools must include all federal education assistance in their revenue calculation, and they cannot delay the drawdown of federal financial aid funds past the end of the fiscal year to game the calculation.
“Predatory, deceptive practices that target veterans and service members have no place in higher education, period,” Education Secretary Miguel Cardona said Tuesday. “Educating our veterans and service members should be about honoring their contributions to our country, not exploiting them for financial gain.”
For-profit colleges have argued that the revenue rule is not a good measure of the quality of education provided by colleges. Jason Altmire, chief executive of Career Education Colleges and Universities, which represents for-profit colleges, called the rule “misguided” but commended the department’s approach.
“Although we fundamentally disagree with this flawed accountability metric, we commend the Department for adopting the consensus-based language agreed upon during the negotiated rulemaking process,” Altmire said in a statement Tuesday. “We look forward to working with the Department to implement the rule so that it is fair for both students and institutions.”
Another proposed rule aims to curb former for-profit colleges from masquerading as nonprofits to avoid regulations such as the 90/10 rule while still reaping the financial benefits of operating as proprietary institutions.