DC Shuttle: Congress Looking at Changing Rule that Requires For-Profit Colleges Get No More than 90% of Revenue from Feds

The Labor-HHS-Education appropriations bill’s $158 billion in discretionary funding provides a 0.12% funding increase from FY 2011 Education Department funding levels, and includes a provision to maintain Pell Grants at their current $5,550 maximum level. FY 2012 funding for the Education Department’s Race to the Top competitive grant program would match current funding at $698.6 million. The Promise Neighborhoods program to improve student achievement in at-risk communities would have its current funding doubled. Approval for the spending came over Republican objections that the bill would provide $4.5 billion in funding to implement the 2010 healthcare reform law.

At a Thursday hearing of a Senate Homeland Security and Governmental Affairs subcommittee, Chair Thomas Carper (D-DE) said that he hopes to introduce legislation this year to change the 90/10 rule for for-profit colleges, which requires that institutions gain no more than 90% of their revenue from federal sources in order to receive federal student financial aid. Because military benefits aren’t counted as federal revenue under the 90/10 rule, critics allege that for-profit colleges aggressively recruit veterans as a means of complying with the rule. Shortly before the hearing, Senate HELP Committee staff released a new study in cooperation with the Department of Veterans Affairs (VA) which indicated that of the 10 largest recipients of post-9/11 GI Bill student aid in the 2010-11 school year, eight were for-profit colleges. According to the report, for-profit colleges received approximately 37% of the $4.4 billion total GI Bill aid disbursed, while almost 60% of students from those top eight for-profit colleges withdrew within a year of enrolling. Spokespersons from veterans groups as well as Curtis Coy, deputy undersecretary for economic opportunity at the VA, asked lawmakers to count military benefits as federal funds for the purposes of the rule. For-profit advocates argued that many colleges would lose eligibility for federal student financial aid if military benefits were counted as a federal source of revenue, and that changing the rule would only raise program costs to students. Sen. Scott Brown (R-MA) also raised concerns over the VA’s move to delegate more oversight responsibility to state approval agencies.


From the New England Council’s Weekly Washington Report Higher Education Update, Sept. 26, 2011. NEBHE is a member of the Council and publishes this column each week.

Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council’s mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit www.newenglandcouncil.com.


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