Senators: Education Secretary Must Shine A Light On For-Profit College Loophole That Harms Veteran And Military Students And Taxpayers

Press Release

Among the top for-profit recipients of Post-9/11 GI Bill funds, seven of the eight companies are currently under investigation for deceptive and misleading recruiting or other possible violations of state and federal law. Yet, as 20 Senators pointed out today in a letter to Education Secretary Arne Duncan, there are no limits on the amount of federal funding that for-profit colleges can receive thanks to the 90/10 loophole, nor is there public data available on how much for-profit colleges truly receive from taxpayers.

Today's letter, organized by U.S. Senators Dick Durbin (D-IL) and Tom Carper (D-DE), was signed by: U.S. Senators Barbara Boxer (D-CA), Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Chris Coons (D-DE), Dianne Feinstein (D-CA), Al Franken (D-MN), Mazie Hirono (D-HI) Ed Markey (D-MA), Claire McCaskill (D-MO), Jeff Merkley (D-OR), Chris Murphy (D-CT), Patty Murray (D-WA), Gary Peters (D-MI), Jack Reed (D-RI), Bernie Sanders (I-VT), Brian Schatz (D-HI) and Elizabeth Warren (D-MA).

"We write to ask you to better protect servicemembers and veterans from being targeted and exploited by some for-profit colleges by publishing the amount and percentage of revenue received by these institutions from all federal educational programs," wrote the Senators. "According to 2013 analysis from the Department of Education obtained by the Center for Investigative reporting, 133 for-profit colleges received more than 90 percent of their revenues from taxpayers when DOD and VA benefits were counted as federal education assistance, and another 292 institutions received more than 85 percent. The now-collapsed Corinthian Colleges chain received $186 million in VA Post-9/11 GI Bill dollars alone."

The current federal 90/10 rule bars for-profit colleges and universities from deriving more than 90% of their revenue from the U.S. Department of Education's federal student aid programs. The other 10% must come from sources other than the federal government. The purpose of this rule is to ensure that schools are not counting on taxpayer dollars to be their sole source of revenue.

Because of the 90/10 loophole, veteran and military educational benefits -- such as Post-9/11 G.I. Bill benefits and the Department of Defense's Tuition Assistance funds -- do not currently count toward the 90% cap on federal dollars. As a result, some for-profit education companies have been found to aggressively recruit and enroll veterans, service members, and their families as a way to evade the 90/10 rule.

"The negative effects of this loophole for students and taxpayers have been well documented in news articles and Congressional investigations and reports. It has led to aggressive marketing and recruitment of servicemembers and veterans," the Senators wrote.

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