Some for-profit schools are targeting veterans’ education benefits because it means more money in their pockets. A loophole in the 90-10 rule – a key piece of law created to restrain for-profit schools – gives for-profit schools a big incentive for targeting veterans’ benefits.
Congress passed the 90-10 rule to make sure that no school could be completely funded by federal dollars. The rule sets up two pools of money: private dollars (like savings, private loans, etc.) and federal dollars (like federal financial aid and loans). Up to 90% of a school’s money can come from the pool of federal dollars, but 10% of the school’s money must come from private dollars. That 10% requirement was intended to allow the free market to weed out poorly performing schools because if a school isn’t delivering a good education, who would pay out of pocket for it?
But, when Congress updated the rule in the 1990s, they made a mistake. They didn’t include veteran and military education benefits – like the New GI Bill – in the pool of federal dollars. These programs are clearly paid for by taxpayers and should be counted as federal money. This loophole allows schools to be completely funded by federal dollars: 90% from federal financial aid and the 10% “private funds” can come from the GI Bill.
This loophole rewards schools for targeting veterans – for each veteran it enrolls, a for-profit school can enroll 9 more students on federal financial aid. Many schools have developed aggressive and deceptive marketing campaigns aimed at getting as many veterans enrolled as possible. And they are succeeding – according to the Senate Health, Education, Labor and Pensions committee, 8 of the top 10 recipients of Post-9/11 GI Bill benefits are for-profit schools.
We want schools to compete to enroll veterans because they understand the value veterans can bring to campus and because the school wants to deliver the quality education and job training needed in today’s competitive job market. Unfortunately, many of these schools don’t deliver. Some of the for-profit schools getting the most GI Bill dollars have dropout rates over 60%. The degrees are expensive and many veterans exhaust all their GI Bill benefits and go into debt to cover the costs their benefits don’t. Upon graduation, many students of for-profit schools can’t find work because employers don’t value their degrees and many for-profit schools don’t have good career services to help vets find jobs.
There are many for-profit schools that do provide excellent job training services, especially for those seeking a vocational training or online program. If the 90-10 rule fulfilled its original intent, schools would have to get 10% of their students to pay out of pocket. The predatory for-profit schools would have to improve their programs and provide a good return on their students’ investment, or fold.
IAVA is calling on Congress to close the loophole that counts VA and DoD education benefits as private funds by swiftly passing S. 2116 (Carper) and H.R. 4055 (Speier). Closing this loophole will take the target off veterans’ backs and protect the GI Bill from predatory for-profit schools. Tax-payer dollars pay for the New GI Bill, and that’s how they should be counted.
Attending school on the Post-9/11 GI Bill? If you think you have been targeted by deceptive recruiting practices or marketing by a for-profit school, contact IAVA here.