Rep. Takano Praises Inclusion of Provision to Close the “90-10 Loophole” in the Latest COVID-19 Relief Package
Riverside, CA – Today, Rep. Mark Takano (D-Calif.), Chair of the House Committee on Veterans’ Affairs, praised the inclusion of a provision that would close the “90-10 loophole” which allows predatory for-profit educational institutions to exploit veterans and waste the GI Bill benefits veterans have earned in the latest COVID-19 relief package.
“Predatory for-profit colleges have taken advantage of the ‘90-10 loophole’ to cheat veterans and servicemembers out of their education benefits while providing them with a low-quality education, useless degrees, and burdening them with student loan debt. 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. “This loophole incentivizes low-quality, for-profit schools to use predatory tactics to aggressively recruit servicemembers and veterans, and in turn, allows them to enroll more minority students and women. Students who attend for-profits are more likely to graduate with large sums of student loan debt they cannot repay. And when some of these for-profits shut down suddenly, taxpayers are left to foot the bill. By closing this loophole, Congress is holding predatory for-profits accountable, safeguarding federal education benefits, and protecting taxpayers. I’m glad that this provision will be included in the latest COVID-19 relief package, which takes a comprehensive approach to secure the economic future of the American people as we recover from the pandemic.”
The 90-10 rule is an existing regulation that requires for-profit institutions to have at least 10 percent of their revenues derived from non-federal sources. The purpose of the 90-10 rule was to validate the quality and cost of these educational programs being offered to students.
Currently, the 90-10 rule does not apply to GI Bill and DOD Tuition Assistance funding, this is currently referred to as the “90-10 loophole.” This loophole creates incentivizes for-profit institutions to recruit servicemembers and veterans to their schools in order for those predatory for-profit institutions to derive more than 90 percent of their revenues from federal sources. For every military student these institutions enroll, they can enroll nine more Title IV students in low-performing programs.
For-profit schools make up about 88% of all school closures. When for-profits shut down suddenly, student veterans and servicemembers are left with useless degrees, credits that do not transfer, and overwhelming student debt.
Rep. Takano has been a strong advocate for closing the 90-10 loophole, protecting student veterans and servicemembers’ education benefits, and holding predatory, for-profit colleges accountable. Rep. Takano first introduced the PRO Students Act in 2015, which would close this loophole and protect students from predatory for-profits. And in 2020, he introduced a bipartisan amendment to the FY 2021 NDAA that would have partially closed the “90-10 loophole” and protected servicemembers’ education benefits from for-profit institutions by making DOD Tuition Assistance count as federal educational assistance funds for the purposes of the 90-10 rule.
Veteran advocates have spoken out in favor of closing this loophole, citing predatory tactics by for-profit institutions that have led to the abuse of earned education benefits, low-quality education, burdensome debt, and worthless degrees for thousands of veterans.
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