Education and Transition

COVID relief package includes major change in for-profit colleges’ rules on GI Bill benefits

Included in congressional Democrats’ massive pandemic relief plan are rules that could upend for-profit colleges’ ability to recruit and enroll veterans in degree programs by limiting how administrators count GI Bill dollars in their finances.

Advocates have long pushed for the move as a way to ensure that veterans aren’t taken advantage of by schools with questionable credentials and poor employment results. But industry officials say the move will unfairly limit veterans choices in favor of traditional, inflexible collegiate courses.

At issue is the so-called 90/10 rule, which requires colleges and universities to have at least 10 percent of their revenues derived from non-federal sources. The idea behind the regulation is to ensure that for-profit institutions aren’t funded solely by federal monies, but instead also include significant investment by students interested in furthering their education.

However, under a loophole in existing rules, GI Bill benefits and Defense Department Tuition Assistance programs are not counted as federal dollars, despite being taxpayer-funded benefits. Advocates have said that incentivizes schools to recruit veterans to plus-up the amount of steady, government dollars they can receive.

“Predatory for-profit colleges have taken advantage of the ’90-10 loophole’ to cheat veterans and servicemembers out of their education benefits while providing them with a low-quality education, useless degrees, and burdening them with student loan debt,” said House Veterans’ Affairs Committee Chairman Rep. Mark Takano, D-Calif., in a statement Tuesday.

“The 90-10 rule was put in place to prevent waste, fraud, and abuse of federal education dollars, but for-profits have exploited the loophole to earn millions in profits.”

Industry officials dispute that characterization. They insist that changing the rules will lead to more complications in who they can enroll and force student veterans into colleges that may not fit their schedules or lifestyles.

“Thousands of American veterans have chosen to pursue their job training and career education goals at proprietary schools, said Jason Altmire, president of Career Education Colleges and Universities. “These brave men and women have earned the right to decide what schools and careers are best for them, and the proposed modifications to the 90/10 rule strip them of that choice.”

The fight over the 90/10 rule has dragged through Congress for several decades, with significant debate but no change. However, congressional Democrats now believe they can change the rule as part of their pending coronavirus relief package, estimated at nearly $1.9 trillion.

The package, being passed through both chambers through a budget reconciliation process, also includes a $15-per-hour minimum wage mandate and numerous new programs aimed at providing financial assistance to families and businesses hurt by the ongoing pandemic.

The House Education and Labor Committee included the 90/10 rule provision in its section of the legislation on Tuesday. The House Veterans’ Affairs Committee is expected to insert additional provisions during a mark-up session on Thursday.

Whether the 90/10 rule survives the process remains to be seen. Democrats need only a majority to pass the final bill, but the change could run afoul of congressional rules regarding budget relevancy.

Still, advocates who have been pushing for the change called the action long overdue.

“We are relieved and hopeful that this will finally remove the target from the backs of servicemembers, veterans, and military families,” said Carrie Wofford, president of Veterans Education Success, in a statement.

The rule change is potentially the second major adjustment that for-profit colleges will have to face regarding GI Bill benefits in recent months. In December, Congress finalized a sweeping veterans policy bill that would limit advertising practices aimed at student veterans and penalize schools found violating those rules.

It also guaranteed that when schools close due to financial issues or lose eligibility because of federal rule violations, student veterans would see their GI Bill benefits fully restored, in an effort to keep institution mistakes from punishing student veterans.

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