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Tightening the 90-10 Rule

Tightening the 90-10 Rule

Inside Higher Ed

Kery Murakami

March 2, 2021

A years-long push to lessen the incentive for for-profit institutions to recruit veterans as students took a major step toward becoming law with the House’s passage of a $1.9 trillion coronavirus relief package Saturday morning.

Included in the package, which would also send another $40 billion in aid to the nation’s colleges and universities during the pandemic, was a provision tightening the controversial “90-10” rule.

The for-profit industry, however, is expected to try to kill the change when the Senate takes up the relief package this week, warning that the change pushed by Democrats would inadvertently lead to for-profits accepting fewer veterans and members of the military. The proposal did survive one hurdle Monday night when the Senate’s parliamentarian ruled that it could stay in the bill, according to groups on both sides of the debate. For-profit industry lobbyists had hoped the parliamentarian would rule that the measure goes beyond what is allowable in the funding bill, as she did in killing the Democratic proposal to raise the federal minimum wage.

Currently, for-profit colleges and universities are required to get at least 10 percent of their revenue from sources other than the federal government. That limits the share of income the institutions can get from students’ federal aid to no more than 90 percent. Those not meeting the rule are barred from being able to receive any of the money the federal government gives out each year through student aid.

The rule was enacted under the theory that for-profits of any quality should be able to get at least 10 percent of their revenue from students willing to pay to attend, or from employers subsidizing the cost of their workers getting training at the institutions.

Representative Bobby Scott of Virginia, the Democratic chairman of the House education committee, told reporters on Friday that the rule requires that for-profit institutions “show some semblance of attraction to people.”

However, critics of the for-profits, which have at times been found to defraud prospective students about the kind of education they’d get, have long complained the 90-10 rule has a loophole — the money service members and veterans use for their education through the GI Bill at for-profits is not counted as federal dollars.

Instead, the GI Bill dollars count toward helping for-profits meet the 10 percent minimum requirement. To advocacy groups like Veterans Education Success, that incentivizes for-profit institutions to aggressively try to get service members and veterans to enroll, and many of them have been defrauded.

Under a provision in the House’s relief package — pushed by Congressman Mark Takano, a Democrat from California who chairs the House veterans’ affairs committee — GI Bill dollars would begin to be counted as federal money.

However, Career Education Colleges and Universities, the lobbying association for the for-profit industry, is hoping to kill the change in the Senate. The group argues the change would actually hurt veterans and service members seeking an education.

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