A Loophole in the 90/10 Rule Allowed For-Profit Colleges to Use G.I. Bill Benefits to Receive Additional Federal Student Aid & Turn a Higher Profit

The American Rescue Plan Act — Which the Congresswoman Voted to Pass — Closed This Loophole

HENRICO, V.A. — At the start of Military Family Appreciation Month, U.S. Representative Abigail Spanberger applauded new federal regulations to increase protections for Veterans and servicemembers from deceptive recruitment practices by for-profit colleges.

A longstanding loophole in the 90/10 rule in the Higher Education Act allowed for-profit colleges to use federal military education benefits to offset a cap on federal student aid these schools otherwise face. While the law requires these colleges to obtain at least 10 percent of their revenue from non-federal sources to prove their value in the private market, this 90/10 loophole allowed for-profit colleges to count federal dollars outside of the federal student aid system — such as G.I. Bill benefits — toward the 10 percent requirement. Every $10 brought in from federal benefits to Veterans and servicemembers meant these schools could receive $90 in U.S. Department of Education aid without needing to secure any private investment.

The American Rescue Plan Act — which Spanberger voted to pass and President Biden signed into law in March 2021 — closed this loophole. Last week, the U.S. Department of Education announced final regulations to implement the change and no longer allow institutions to count federal military education benefits toward the 10 percent revenue requirement. These regulations protect Veterans and servicemembers from predatory recruitment practices by removing the incentive for some for-profit colleges to aggressively target marketing and recruitment toward these students.

“For far too long, for-profit colleges have seen our Veterans and servicemembers as nothing more than dollar signs,” said Spanberger. “Congress enacted the 90/10 rule to ensure that for-profit colleges offered an education for which students were willing to pay. But this loophole has allowed many revenue-earning schools to survive only by an influx of federal payments — and do so on the backs of our Veterans and servicemembers. I was proud to vote for the American Rescue Plan Act to hold accountable schools that care more about turning a profit than preparing students for success, and I applaud the Department of Education for moving to put an end to these predatory practices — because all Americans who have served our country in uniform deserve a high-quality education.”

Click here to read final regulations from the U.S. Department of Education.

###