Rep. Takano’s Bipartisan Amendment to Close the 90-10 Loophole and Protect Servicemembers’ Education Benefits from Predatory For-Profit Institutions Included in NDAA
Washington, DC – Today, the House voted to adopt Rep. Mark Takano’s (D-Calif.) amendment to the National Defense Authorization Act (NDAA) for Fiscal Year 2021, which would close part of the 90-10 loophole and protect 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.
“For far too long, the 90-10 loophole has led to the exploitation by for-profit colleges of education benefits earned by servicemembers and veterans and is often a waste of taxpayer dollars,” said Rep. Mark Takano. “The 90-10 rule was put in place to prevent waste, fraud, and abuse of federal education dollars, but for-profit colleges have exploited the loophole to earn millions in profits by targeting servicemembers and veterans. This loophole incentivizes these predatory for-profits to aggressively recruit servicemembers and veterans for their earned education benefits, allowing them, in turn, to enroll even more low-income, women, and minority students. These predatory institutions also provide students with a low-quality education, insurmountable debt, and useless degrees. We must close the loophole to rein in the predatory for-profit college industry and protect servicemember and veterans’ hard-earned education benefits. As Chairman of the House Committee on Veterans’ Affairs and a former public-school teacher, I’m glad this provision was included as an amendment to the FY 21 NDAA.”
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 or DOD Tuition Assistance funding, this is currently referred to as the ‘90-10 loophole.’ This loophole 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 revenue from federal sources. For every military student these institutions enroll, they can enroll nine more Title IV students in low-performing programs.
A 2012 report by the Senate HELP Committee found that the for-profit industry received $280 million of about $563 million from Tuition Assistance dollars that were disbursed in the previous fiscal year. For-profit colleges are the largest recipients of the Tuition Assistance dollars.
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.
The bipartisan amendment was co-sponsored by Reps. Lee (NV), Riggleman, Cisneros, Panetta, Dingell, Kennedy, Kildee, Garcia (TX), Porter, and Omar.
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