U.S. Education Department Rules Crack Down on For-Profit Colleges

By The New England Council

DC Shuttle …

Ed Dept Reaches Consensus on 90/10 and Ability to Benefit Rules. After three months of negotiations between the U.S. Department of Education and higher education representatives, the department failed to reach consensus on all but two of the Biden administration’s seven regulatory proposals regarding higher education. The department did reach consensus on the new 90/10 rule, and the “ability to benefit” rule. The 90/10 rule prohibits for-profit colleges from receiving more than 90% of their revenue from federal student aid. Currently, military education funds such as GI Benefits do not count toward the 90% calculation. Last year, however, Congress passed a law within the American Rescue Plan Act of 2021 (H.R.1319) that requires for-profit universities to count military education funds toward the 90% calculation starting in 2023. This law change is reflected in the new 90/10 proposal which was finalized last week. The department also reached a consensus on the “ability to benefit” rule, which details the ability of students without high school diplomas to receive federal financial aid if they meet “certain criteria and enroll in eligible programs.” Read more on these regulatory proposals in Higher Ed Dive.

New Policy Holds Corporate Owners of Colleges Accountable. The Education Department announced a new policy intended to hold companies that own institutions responsible for funds owed to the federal government, including liabilities arising from “closed school loan discharges and borrower defense to repayment claims.” These new procedures are intended to protect taxpayers, students and borrowers by “allowing the Department to recover liabilities from corporate owners.” Under the department’s new policy, any organization or entity with at least a 50% interest in a non-public college that meets “certain other conditions” will be required to sign the school’s Program Participation Agreement (PPA). These efforts are aimed to combat how college closures have left many students “academically stranded, often bearing debt for an education they were unable to complete or that did not live up to the school’s promises.” The Biden-Harris administration has taken other steps to ensure that students are “better protected” in the event of school closures, with the administration granting $3.2 billion in closed school and borrower defense discharges to borrowers who attended colleges that closed. Read more on this new policy in the department’s press release, and in the Chronicle of Higher Education.

We publish the DC Shuttle each week Congress is in session featuring higher ed news from Washington collected by the New England Council, of which NEBHE is a member. This edition is drawn from the Higher Education Update in the Council’s Weekly Washington Report of March 28, 2022. For more information, please visit: www.newenglandcouncil.com.


Leave a Reply

  • (will not be published)

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>