Research Company Sees Little Risk in Changing 90-10 Rule
Inside Higher Ed
March 9, 2021
A change in the 90-10 rule in the coronavirus relief package heading through Congress likely will not affect many for-profit institutions, said an analysis Monday by BMO Equity Research.
A provision in the relief bill approved by the Senate and expected to be passed by the House would change the way GI Bill dollars are counted under a rule aimed at for-profit institutions.
Currently, colleges and universities are required to get at least 10 percent of their revenue from sources other than the federal government. The rule counts the money service members and veterans use for their education toward meeting the minimum 10 percent requirement. Critics say that gives for-profits an incentive to target veterans and service members.
The relief bill would change the rule to count GI Bill dollars as federal funds.
“Most institutions easily comply” with the rule, BMO’s analysis said. Only three for-profits, representing 0.1 percent of for-profit institutions, had more than 90 percent of their revenue come from federal sources in the 2018-19 school year, the report said.
Among publicly held companies tracked by the investment research firm, American Public Education Inc.’s Hondros College came the closest to not complying, with 82 percent of its revenue coming from federal sources — “well below the current threshold.”
Even with the change, “there is much these schools can do to avoid the threshold, including expanding non-Title IV sources (e.g., corporate partnerships),” the report said. “As such, we believe there is little risk among our covered companies in terms of non-compliance.”