Veterans Issues
Since its original enactment as part of the 1992 reauthorization of the Higher Education Act, the 90/10 Rule has required for-profit institutions to receive at least 10 percent of their tuition revenue from sources other than student financial assistance programs. Because the rule did not apply to funds from federal agencies other than the Education Department, it inadvertently created a loophole for unscrupulous schools to target veterans and military-connected students. Every dollar of their GI Bill and Tuition Assistance benefits enabled such schools to collect nine dollars in Title IV funds. As a result, thousands of veterans were subjected to high-pressure sales tactics and the misrepresentation some schools used to recruit veterans and circumvent the intent of the rule.
After more than a decade of advocacy by veterans service organizations, Congress finally closed the 90/10 loophole in 2021 and instructed the Department of Education to develop enabling regulations. Through a subsequent negotiated rulemaking process, the Department finalized and reinstated this baseline protection for student veterans.
We believe the proposed regulation includes important safeguards against potential abuses. These provisions include:
- Counting all federal funds used to pay tuition, fees, and other institutional charges—whether received directly from a federal agency or indirectly from students—as mandatory;
- Excluding tuition discounts, grants, and scholarships controlled by the institution or its owners or affiliates;
- Treating properly revenues from institutional loan assets held by the school; and
- Incorporating safeguards in the Department’s treatment of institutional revenues from private financing schemes such as income-share agreements.
We urge the Education Department to maintain these and other important protections in regulations. The Department will need to actively monitor institutional compliance with the rule. To do so, we urge the Department to track and publish the component of each institution’s non-federal revenues derived from its ineligible programs.
Resources
Veterans Education Success, “90/10 Loophole”
American Institutes for Research, “A Study of Post-9/11 GI Bill Student Outcomes”
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