Military and veterans’ education benefits do not count toward that threshold despite being federal aid. As a result, some veterans groups say for-profit colleges aggressively recruit military members. About 30 percent of GI Bill tuition benefits went to for-profit schools in 2017, according to the Government Accountability Office.
The legislation, dubbed the Protect VETS Act, would end the exemption and impose penalties for violating the revenue rule. Schools that flout the caps for a year would be barred from enrolling new military students using Department of Defense education benefits, while those who break the law for three years could lose access to all federal financial-aid funding.
“I appreciate the work Senators Carper, Cassidy, Lankford and Tester have done to take a highly partisan issue and create a bipartisan solution,” Alexander said in a statement. “This is a responsible and reasonable step to ensure that all of our military and veteran students are attending quality institutions worth their time and money.”
The senator’s decision was first reported by Bloomberg Government.
Although veterans issues usually garner bipartisan support in Congress, Republicans have remained on the sidelines in efforts to treat military education benefits the same as federal student aid under the revenue rule. Many have questioned the fairness of the 90/10 rule because it applies only to for-profit colleges.
Congress first capped the amount of taxpayer dollars for-profit colleges could receive at 85 percent in 1992 to crack down on fly-by-night schools making money from student aid programs. The government figured a for-profit school with quality programs should have no trouble deriving at least 15 percent of its revenue from students willing to put up their own money. The for-profit industry fought the rule, which was relaxed six years later as the cap was raised to 90 percent, and military education benefits were exempted.
In a paper released last year, Alexander wrote that the rule was neither a good accountability measure nor a measure of the quality of education provided by colleges. “If an institution produces valuable outcomes for its students,” he said, “then concerns over the volume of taxpayer dollars as a percentage of revenue becomes less meaningful as an accountability measure.”
Advocates for the revenue rule say that too many for-profit colleges fail to graduate students and leave them with high debt loads that many borrowers struggle to repay. Imposing restrictions on the federal dollars going to such schools, they say, is necessary to protect students and taxpayers.
The issue has become partisan, with Democratic bills to close the funding loophole since 2012 failing to gain enough support to pass. The new legislation marks the first time any attempt to close the loophole has received bipartisan support in the Senate.
“For years, I have worked to protect our military and veteran students by closing the 90/10 loophole. Chairman Alexander’s support for common sense, bipartisan legislation … makes actually doing so a possibility this Congress,” said Carper, a 23-year veteran of the Navy and Navy Reserves.
Veterans groups say Alexander’s support is a significant win that could yield results as Congress updates the federal law governing higher education. The chairman of the Senate Education Committee said he will include the bill in legislation to reauthorize the Higher Education Act.
“Chairman Alexander’s support for closing the 90/10 loophole is a game-changer,” said Carrie Wofford, president of Veterans Education Success, an advocacy group. It “means Congress can and will remove the recruiting target from the backs of veterans and military-connected students.”
The aggressive recruiting practices of some for-profit colleges have been well-documented. A 2012 Senate investigation found evidence of schools deploying teams at veterans hospitals and wounded-warrior centers to enroll students. Some recruiters misled or lied to veterans in telling them their military benefits cover the full cost of tuition.
For-profit colleges say the entire industry should not be penalized for the behavior of a few bad actors.
Industry groups have bashed the new Senate bill for imposing restrictions that could limit education choices for veterans.
“It is incredibly disappointing to see a willingness on both sides of the aisle to restrict veterans’ choice under the guise of protecting veterans,” said Michael Dakduk, a Marine veteran and executive vice president of the industry group Career Education Colleges and Universities. “In the event this bill advances … a waiver is needed to support student veterans at quality career, technical and trade schools negatively impacted by a change to 90/10.”