Congresswoman Jackie Speier (D-San Mateo/San Francisco) and a bipartisan, bicameral group of Congressional colleagues today introduced legislation in both chambers that will close a decades-long loophole in the for-profit college funding formula. The bill, the Military and Veterans Education Protection Act (MVEP), H.R. 4055, will hold for-profit schools accountable for their treatment of all taxpayer funded benefits, including tuition payments from veterans and members of the military using Post-9/11 G.I. Bill funds and Department of Defense (DOD) tuition assistance.
In the last academic school year, for-profit schools collected $1.5 billion in Post-9/11 G.I. bill tuition payments equaling nearly 1/3 of total disbursements made by the Department of Veterans Affairs, a federally funded agency. Yet, a loophole in the 90/10 funding formula meant to ensure for-profit schools derive at least 10% of their tuition funds from private sources, allowed the for-profit institutions to consider all $1.5 billion as privately funded. H.R. 4055 closes the 90/10 loophole.
Joining Congresswoman Speier as original cosponsors of the MVEP Act are: Walter Jones (R-NC), Elijah Cummings (D-MD), Rosa De Lauro (D-CT), Mike Honda (D-CA), Raúl Grijalva (D-AZ), Keith Ellison (D-MN), Jared Polis (D-CO), and Mike Quigley (D-IL). The Senate companion was introduced Senator Tom Carper (D-Del.).
"We've got to ask the question -- when these for-profits are taking taxpayer funds and attributing 22% to marketing, 37% to profit, and they have an abysmal 60-70% drop out rate -- is this a good deal for taxpayers? Is this a good deal for students? This bill holds for-profits accountable and puts all taxpayer funded loans and benefits into the 90% side of the formula where they ought to be," said Speier.
CARPER: "I believe we have a moral imperative to ensure that those who have sacrificed for our country obtain the best education possible, one that will equip them with the skills they need to find a good job, repay their college loans, and go on to live productive lives. Everything I do, I know I can do better. The same can be said about current educational programs that serve veteran and military students. We currently have some schools that serve veterans and service members' education needs very well -- in essence they wear 'white hats.' Unfortunately, we also have some schools whose hats aren't so white and those are the schools we're trying to reach with this legislation. We must focus on how we can fix problems within the higher education system by better encouraging all schools to deliver a higher quality education to our military and veteran populations. This legislation is a responsible approach to an important issue, one that has been vetted with and is supported by many veterans and military service groups and leaders. We demand so much of our men and women in uniform. We must also demand more from the schools that serve our service members and veterans so we can get better results from this taxpayer funded program. I look forward to working with my colleagues on both sides of the aisle and in both chambers to move this important bill forward."
JONES : "We have all heard too many horror stories about American heroes who bravely defend their country in war, come home and become heavily recruited by a for-profit school that provides them with a degree that is a worthless piece of paper. We owe it to these heroes, to the taxpayers and we also owe it to the many reputable for-profit schools, to reform this rule so that the bad actors are weeded out."
DELAURO: "The brave men and women who serve our nation overseas deserve our admiration and our gratitude. They also deserve our vigilance. Because they look out for us, we need to be looking out for them. Currently, proprietary schools are exploiting a loophole that allows them to receive all of their profits from financial aid, and they are trying to enroll as many veterans and service members as possible, often under false pretenses, to inflate profits. We owe it to our veterans, and to American taxpayers, to close this loophole and bring fairness and accountability to the proprietary college system. The Military and Veterans Education Protection Act is a good step in the right direction."
CUMMINGS: "As for-profit schools continue to receive huge amounts of taxpayer dollars in education assistance funding, their executives reap the financial benefits, paying themselves millions in compensation and bonuses. While I will continue to investigate the link between executive compensation and student performance, I am proud to work with Congresswoman Speier and other Members to introduce legislation that will allow veterans and servicemembers to attend the school of their choice without undue pressure from aggressive recruiters."
GRIJALVA: "There's no reason for any school to use veterans or the federal government as automatic cash machines," Rep. Grijalva said. "Pretending veteran educational benefits aren't federal aid, just to squeeze more out of each student at taxpayer expense, needs to stop now. That's why I'm so proud to support this bill."
POLIS: "This legislation will help better protect taxpayers' dollars while improving students' postsecondary education opportunities. Congress must closely guard higher education funding and not allow it to be funneled through the back door to institutions that have questionable academic outcomes. For the sake of our economic future, we should pass this bipartisan bill in Congress this session."
QUIGLEY: "Our veterans and active duty military have worked hard to protect us, and we must protect them in return. One of the promises we make to the men and women who serve in our military is that they will have access to higher education. This bill closes a loophole that encourages for-profit colleges, many of which care more about their bottom-line than providing a quality education, from preying on our brave men and women and their families."
The Military and Veterans Education Protection Act clarifies the definition of federal funds as it pertains to the 90/10 funding formula legislated by Congress in 1998 to ensure that for-profit colleges generate at least 10% of their tuition revenue from private payments. H.R. 4055 closes a loophole that allows for-profit colleges to calculate as private tuition payments from the active and veteran military service members who receive federally funded benefits.
The legislation would also amend current law so that if a school is out of compliance for two consecutive years, it would lose eligibility to accept not only new Department of Education dollars, but also new DOD education dollars or VA education dollars. Schools will regain their eligibility once they take a series of steps toward compliance, which is unchanged from current law.