The U.S. Department of Education finalized a series of regulations Thursday, one of which limits how much federal financial assistance can go to for-profit colleges and corrects what the agency deemed a policy loophole that enticed these institutions to aggressively recruit and sometimes cheat members of the military.
This policy change is part of the Biden administration staking out an ambitious higher education regulatory agenda, which also includes attempting to overhaul elements of the beleaguered federal student loan system and colleges’ oversight of sexual misconduct on campus.
The new regulation alters what’s known as the federal 90/10 rule. It requires for-profit colleges to derive at least 10% of their revenue from areas other than Title IV financial assistance, which includes federal student loans and Pell Grants, aid that targets low- and moderate-income students.
But benefits like those from the U.S. Department of Defense’s Tuition Assistance program and GI Bill are not considered Title IV funding, historically enabling for-profit colleges to apply them toward the 10% requirement, similar to private financing sources.
This dynamic incentivized for-profit institutions to try to attract veterans and active service members to enroll, sometimes through deceptive means. It’s a longstanding practice — the results of a two-year Senate committee investigation released in 2012 noted how for-profit institutions would intentionally recruit among vulnerable military populations, like service members at veterans hospitals.
The regulation unveiled Thursday classifies military benefits as federal education funding in the 90% part of the calculation, presumably cramping for-profit colleges’ tactics. The Education Department will publish a list of financial sources it considers to be federal education revenue in the Federal Register, the government’s regulatory journal.
This will likely have tangible effects on these institutions. Research published last year by military advocacy organization the Veterans Education Project showed 87 for-profit colleges would fail the 90/10 rule test if military benefits counted.
