March 08, 2021

Relief Package Closes Loophole For-Profit Colleges Use to Exploit Veterans; Provision Follows Long-Time Push from Senators Hassan & Durbin

WASHINGTON – The American Rescue Plan that the Senate passed on Saturday will close a loophole that for-profit colleges use to increase their own profits by taking advantage of veterans, service members, and their families. For-profit colleges -- which have troubling track records of misleading students and saddling them with crippling debt -- have seen an uptick in enrollment due to the economic downturn caused by the COVID-19 pandemic.

 

“Veterans and service members enroll in higher education programs to help them get the skills and expertise that they need to thrive in civilian life – but due to a loophole, unscrupulous for-profit colleges often exploit veterans, using federal dollars to drive profits while often failing to deliver,” said Senator Hassan. “Closing this loophole will hold predatory for-profit colleges accountable and help more veterans receive the high-quality education that they deserve.”

 

“I have been fighting for a long time to close the 90/10 loophole that incentivizes for-profit colleges to target veterans and service members. I’m glad the American Rescue Plan finally does it,” Senator Durbin said.

 

Senators Maggie Hassan (D-NH) and Dick Durbin (D-IL) have long worked to end the loophole. 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. It results in aggressive and, often, predatory recruitment of these students, who are too often left with substantial debt and little to nothing to show for it. 

 

The American Rescue Plan includes a bipartisan amendment to ensure that all federal funding that for-profit colleges receive is included in the 90 percent cap, including Department of Veterans Affairs GI Bill and Department of Defense Tuition Assistance benefits, by the end of 2022.

 

Senators Durbin and Hassan recently introduced the Protecting Our Students and Taxpayers (POST) Act, which would prohibit for-profit colleges and universities from receiving more than 85 percent of their revenue from the federal government and change the calculation of federal revenue to include all federal funds, including Department of Veterans Affairs GI Bill and Department of Defense Tuition Assistance benefits. Senator Durbin has introduced the bill since 2012. 

 

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