February 28, 2021

Senator Hassan, Colleagues Introduce Legislation to Close Loophole That Encourages For-Profit Colleges to Target Veterans & Service Members

Legislation Builds on Senator Hassan’s Work to Hold Predatory For-Profit Colleges Accountable

WASHINGTON – U.S. Senator Maggie Hassan (D-NH), a member of the Health, Education, Labor, and Pensions Committee and the Veterans Affairs Committee, joined Senator Dick Durbin (D-IL) and others in introducing bicameral legislation to help end the for-profit college industry’s aggressive recruiting of veterans, service members, and their families. The Protecting Our Students and Taxpayers (POST) Act would prohibit for-profit colleges and universities from receiving more than 85 percent of their revenue from the federal government, as well as change how federal revenue is calculated to include all federal funds, including Department of Veterans Affairs GI Bill and Department of Defense Tuition Assistance benefits. The Senators’ efforts comes as for-profit colleges have seen an uptick in enrollment due to the economic downturn caused by the COVID-19 pandemic.

 

“For too long, for-profit colleges have exploited veterans, service members, and their families in order to pad their own pockets, and it is long past time that we took action to close this harmful loophole,” Senator Hassan said. “This commonsense legislation builds off my efforts to help prevent for-profit institutions from taking advantage of veterans. As the pandemic continues to place a strain on all students, including veterans, and enrollment in for-profit colleges has increased, we must do more to hold these institutions accountable and help ensure that students are protected from their predatory practices.”

 

Senator Hassan also included a provision similar to the POST Act in the PROTECT Students Act that she introduced last Congress with Senator Durbin.

 

The current federal 90/10 rule bars for-profit colleges and universities from deriving more than 90 percent of their revenue from the U.S. Department of Education’s federal student aid programs. Because of the way the law is written, 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 currently count toward the 90 percent. As a result, for-profit colleges can receive an unlimited percentage of their revenue directly from federal taxpayers by enrolling large numbers of these students. The law gives for-profit colleges a financial incentive to aggressively recruit and enroll veterans, service members, and their families to their programs. 

 

The POST Act would reinstate the original ratio of 85/15, which was loosened to 90/10 in 1998, and changes the definition of what counts as federal revenue so that it includes all federal education assistance funds. This new definition would eliminate the powerful incentive for for-profit schools to aggressively recruit service members and veterans and ensure that all schools are complying with the law as it was intended. Additionally, the POST Act would count institutional loans (schools can now use Title IV funds from one student to lend to another) in the calculation of federal revenue sources and eliminate a school’s Title IV eligibility after one year of noncompliance instead of the three consecutive years it now takes. 

 

Senator Hassan is focused on protecting students from predatory for-profit colleges and universities, and joined in leading a group of her colleagues in calling on the previous administration’s Department of Education to hold corporate executives and shareholders of for-profit colleges personally and financially responsible for cheating students and to collect damages from them using its existing legal authority under the Higher Education Act of 1965. The Senator also joined in efforts last year to overturn the Department of Education’s “borrower defense” rule, a proposal that will effectively deny students who were cheated or defrauded by predatory for-profit colleges of the debt relief that they are entitled to under law, which the previous administration ended up vetoing.

 

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