Following Push by Senators Hassan & Durbin, Biden Administration Takes Important Step to Close Loophole that For-Profit Colleges Use to Exploit Veterans

WASHINGTON – Following a successful push by U.S. Senators Maggie Hassan (D-NH) and Dick Durbin (D-IL), the Biden administration announced that it is taking steps to implement legislation that the Senators passed to close a loophole that for-profit colleges use to increase their own profits by taking advantage of veterans, service members, and their families.

“Veterans, service members, and their families have been a primary target of predatory for-profit colleges that encourage them to enroll in courses, and then far too frequently spit these students out months later with a worthless degree and mountains of debt,” Senator Hassan said. “The Biden administration is taking important steps to implement a law that Senator Durbin and I helped secure in the American Rescue Plan to close a loophole that currently encourages these for-profit colleges to aggressively recruit veterans. I will continue to push the administration to close this loophole before the end of the year so that we can help prevent any more veterans and their families from being the target of these deceitful scams.”

“The for-profit college industry is one of the most heavily subsidized industries in America. Before the closure of the 90/10 loophole in the American Rescue Plan, these entities could receive 100 percent of their revenue from federal taxpayer dollars—and many did. At the same time, they cheated students and veterans out of a worthwhile education and left them with insurmountable debt. I have long introduced the Protecting Our Students and Taxpayers (POST) Act to close the 90/10 loophole and reduce the amount of federal revenue for-profit colleges can receive to 85 percent. I’m pleased that the loophole that encouraged for-profit colleges to prey on veterans and service members is closed. But there is more work to do by Congress and this Administration to stop for-profit colleges from taking advantage of students and truly hold them accountable,” said Senator Durbin.

The Biden administration’s actions come after the American Rescue Plan included a measure that Senators Hassan and Durbin championed to ensure that for-profit colleges and universities are not incentivized to take advantage of veterans and their families in an effort to receive more federal aid. Currently, for-profit colleges and universities cannot derive more than 90 percent of their revenue from the U.S. Department of Education’s federal student aid programs. However, veterans’ and active duty service members’ federal education benefits – such as G.I. bill education benefits and the Department of Defense’s tuition assistance funds – do not count toward the 90 percent. This allows for-profit colleges to receive up to 100 percent of their revenue straight from federal taxpayers by enrolling large numbers of veterans and service members and results in aggressive and, often, predatory recruitment of these students.

The Biden administration is also taking other steps to protect students from predatory for-profit colleges, which are included in legislation, the PROTECT Students Act, that was introduced by Senators Hassan and Durbin. That includes a measure to ensure that career education programs are preparing students for good-paying jobs by working to reinstate the “gainful employment” rule – which aims to hold career college programs accountable when their graduates consistently experience poor career outcomes. The administration is also working to crack down on for-profit higher education institutions that attempt to convert to non-profit status, which allows these institutions to escape critical accountability measures. This measure is also included in Senators Hassan and Durbin’s PROTECT Students Act.

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