- The Department of Education is negotiating changes to regulations for for-profit colleges.
- The changes could hurt military veterans, a highly coveted subset of students for the industry.
- A funding loophole makes veterans highly profitable for for-profit colleges.
The Department of Education began negotiations to change regulations related to the for-profit college industry in December, a move that some advocates say will harm students.
“This proceeding is blocking a regulation that was carefully considered and carefully crafted to protect students and taxpayers from well-documented abuses by some career colleges… These students, as before, will be veterans, single mothers, people of color, immigrants, and the forgotten Americans President Trump promised to fight for,” David Halperin, an attorney who writes about the for-profit-college sector, said at the meeting.
The regulation in question is a provision called “gainful employment,” which mandates that student borrowers not pay more than 30% of their discretionary income in student-loan payments. It was created to address for-profit colleges that charged high tuition payments but left graduates with poor career opportunities or low-paying jobs.
Military veterans are particularly at risk to slackening regulations due to a funding loophole.
For-profits are governed by a federal provision called the “90-10” rule which mandates that for-profit colleges cannot receive more than 90% of their revenues from federal student aid from the Department of Education (ED).
But funds from the US Veterans Affairs Office (VA), a federal agency, do not count in the 90% category. That means, in theory, if a for-profit receives the full 90% from the ED and the remaining 10% from the VA, it could operate entirely on federal money.
For-profit colleges especially covet enrolling veterans for this reason, which can lead to aggressive, and sometimes deceptive, recruiting tactics.
“This loophole creates an incentive to see servicemembers as nothing more than ‘dollar signs in uniform,'” the US Senate, Health, Education, Labor and Pensions Committee wrote in a 2014 report, issued after a two-year investigation into the sector.
The report disparaged for-profit colleges for abuses and the share of GI Bill money they receive. It also revealed that of the top 10 institutions receiving GI Bill dollars, eight were for-profit schools. ITT Tech, which shuttered in 2016, ranked third on the list, according to the report.
The Obama Administration cracked down on the for-profit industry, instituting rules like gainful employment, to hold schools accountable for providing students useful degrees.
But despite that push, an recent analysis by nonprofit organization Veterans Education Success found that the for-profit industry still heavily relies on VA funds, and that veteran students at certain for-profits are increasing even while nonmilitary students decline.
The New York Times, which frequently writes about abuses in the for-profit industry, again called out schools in an editorial about the targeting of veterans.
“Despite efforts by Congress, the Obama administration and state attorneys general to stop the predatory practices of for-profit colleges, veterans and service members who rely on funding from the G.I. bill and the Defense Department to attend school are still being targeted by an industry infamous for saddling people with debt and useless degrees,” the editorial board wrote.