GI Bill Benefits Vs. The 90/10 Rule

Those who want to use their GI Bill benefits at for-profit colleges have in the past been affected by something known as the 90/10 rule, which is a regulation that requires institutions of higher education to have a minimum of 10 percent of the school’s revenue generated from non-federal sources.

It’s not directly tied to the GI Bill, but is a regulation that is meant to insure that for-profit colleges don’t get all their money from the federal government.

Why are GI Bill students affected by this? Because a loophole in the rules allows the GI Bill and other DoD tuition assistance programs to be used by for-profit colleges separately from other federal funds. GI Bill benefits actually do NOT count as federal money under the 90/10 rule. That gives for-profit schools a major incentive to aggressively recruit those who would attend using GI Bill benefits.

The 90/10 rule has been under fire for years. A 2017 report by VeteranEducationSuccess.org notes, “…the for-profit sector has continued to recruit and enroll ever-larger numbers of veterans and servicemembers and collect their hard-earned benefits” adding that a study found “…a growing reliance on VA and DOD dollars as enrollment of Title IV students has declined in recent years.”

The 2017 report alleges that the for-profit sector’s “dependence on the federal revenue stream from veterans and servicemembers” increased more than 60% during the time periods reviewed.

But there are voices that contest closing the 90/10 rule’s loophole–that GI Bill money can be accepted by for-profit colleges without counting that money as federal funds–saying it will unfairly disadvantage GI Bill users.

A group called The Veterans Education Project conducted a study it claims shows that eliminating the loophole in the 90/10 rule could result in for-profit colleges closing and reducing the number of available seats for veterans.

Past Attempts To End The 90/10 Loophole

There have been 90/10 studies and papers published for years acknowledging the loophole should be closed. In spite of many attempts to eliminate the loophole, progress has not been great.

In 2013, as part of the National Defense Authorization Act for 2014, proposed changes would have ended parts of the 90/10 loophole and proposed to forbid colleges from using certain federal education benefit funds to advertise or market to veterans.

But an article by NewAmerica.org notes that a group of GOP lawmakers opposed the measure. Which lawmakers? John Kline, Chair of the Education and Workforce Committee; Jeff Miller, Chair of the Veterans’ Affairs Committee; Buck McKeon, chair of the Armed Services Committee; and Bill Flores, chair of the Economic Opportunity Subcommittee on the Veterans’ Affairs Committee. This group demanded the 90/10 restrictions be removed from the 2014 NDAA.

In 2019, there was a bipartisan bill introduced called the Protect VETS Act, which was designed to close the loophole. That attempt did not succeed. But in 2020, the State of Maryland became the first to eliminate the loophole at the state level.

In Maryland, military benefits now count toward the 90 percent federal funding maximum AND forbids for-profit schools that get over 90 percent of their revenue from federal funds from enrolling state residents.

Ending The Loophole Via Other Means

Many in Congress have fought over the 90/10 rule, and in 2021 some lawmakers found what seemed to be the perfect opportunity to eliminate the controversy once and for all by including language to eliminate it as part of pandemic relief legislation.

It was included in the 2021 COVID-19 economic stimulus/relief proposal (The American Rescue Plan Act of 2021) worth roughly $1.9 trillion and ending 90/10 wasn’t the only “add-on” to the package. Other measures included a proposed hike in the minimum wage to $15 an hour.

The section of the Act intended to close the loophole is Sec. 2013. Modification of revenue requirements for proprietary institutions of higher education. The process by which 90/10 would be eliminated is fairly simple for a piece of legislation.

“Section 487(a)(24) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(24)) is amended by striking ‘‘funds provided under this title’’ and inserting ‘‘Federal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution (referred to in this paragraph and subsection (d) as ‘Federal education assistance funds’)’’.

The two other changes in federal law that would be required here if the act passes are:

(b) IMPLEMENTATION OF NON-FEDERAL REVENUE REQUIREMENT.—Section 487(d) of the Higher Education Act of 1965 (20 U.S.C. 1094(d)) is amended—

(1) in the subsection heading, by striking ‘‘Non- title IV’’ and inserting ‘‘Non-Federal’’; and

(2) in paragraph (1)(C), by striking ‘‘funds for a program under this title’’ and inserting ‘‘Federal education assistance funds’’.

A fairly simple and not-complicated adjustment to existing regulations. But will this make it all the way to the President’s desk to be signed into law?

Moving Closer To The End Of The 90/10 Issue

These additions–including the one that would end the 90/10 loophole–are not guaranteed to survive a congressional review of the legislation–GOP officials have gone on record opposing a variety of measures in the stimulus package and it is entirely possible many such add-ons get removed along the way.

But if the entire $1.9 trillion proposal makes it to the President’s desk without having removed items like those mentioned above, 90/10 could become an issue of the past. At least where the military community is concerned.

Those who might feel cynical about the chances of that happening should take comfort that the writing may be on the wall for the loophole in any case. The real question might not be whether 90/10 goes away, but how long it would take to successfully kill it off by alternate means.

Congress has been aggressively targeting veteran education issues related to GI Bill benefits. One bill restricted how colleges advertise to veterans, and in cases where a for-profit college closes due to becoming ineligible for GI Bill funds the veteran has recourse to apply for a full refund of GI Bill benefits used at the institution.

If more states take the approach Maryland has, over time passing a federal version of the measure could be rendered all but moot. But states take a long time to do things; just look at how slowly the legalization of cannabis at the state level has happened. But it’s entirely possible that federal reforms ending the 90/10 loophole for for-profit colleges could be ending completely, once and for all.

GI Bill Benefits Vs. The 90/10 Rule

Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News