Democrats Seek to Close Loophole in ‘90-10’ Rule

Democrats working on a pandemic relief plan are hoping to include language that would close a loophole that veteran advocates say encourages for-profit schools to scam veterans.

The “90/10 Rule” requires for-profit schools to collect at least 10% of their revenue from sources other than the federal government. But the government does not count G.I. Bill funding as federal revenue.

This means for every dollar for-profit schools collect from veterans, they can get nine more from students on other federal aid. Consequently, according to critics, for-profits schools use particularly aggressive and deceptive tactics to recruit veterans.

“The 90-10 rule was put in place to prevent waste, fraud, and abuse of federal education dollars, but for-profits have exploited the loophole to earn millions in profits,” said Rep. Mark Takano (D-Calif.), the chairman of the House Veterans Affairs Committee.

For-profit schools have drawn intense scrutiny from lawmakers and advocates in the past. Some schools have been ordered to refund money and cancel debt for their marketing practices toward G.I. Bill recipients.

Groups representing for-profit schools oppose the proposed changes.

“Thousands of American veterans have chosen to pursue their job training and career education goals at proprietary schools,” Jason Altmire, the president of Career Education Colleges and Universities, told Military Times. “These brave men and women have earned the right to decide what schools and careers are best for them, and the proposed modifications to the 90/10 rule strip them of that choice."