Veterans Turn Sights to 90-10 Rule

Veterans' organizations see negotiations over the Higher Education Act as an opportunity to tighten a federal exemption they say makes service members target of aggressive marketing by for-profit colleges.

August 27, 2019
 
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Veterans' groups played a key role last year in blocking a Republican proposal to update the landmark higher education law. A campaign against the legislation, known as the PROSPER Act, zeroed in on a proposal to kill Public Service Loan Forgiveness.

Now with Democrats in control of the U.S. House of Representatives and a bipartisan effort to reauthorize the Higher Education Act on the horizon, those veteran groups have turned their focus to another long-held priority: addressing for-profit colleges' recruitment of student veterans.

A federal rule known as 90-10 caps the share of revenue for-profits can take in from federal student aid at 90 percent. But the cap exempts federal tuition benefits for veterans and active members of the U.S. military. Several veterans' groups want to those benefits to count toward the federal cap, which could spell trouble for some for-profits.

“Absolutely, 90-10 is our top priority,” said Lauren Augustine, vice president for government affairs at Student Veterans of America. “It will continue to be so until we see closure of the loophole.”

The abrupt shutdown of several for-profit college chains in recent years has added to the sense of urgency for veterans' organizations. Veterans groups say an overreliance on federal aid makes colleges less stable when they face potential sanctions.

“That’s part of why momentum is picking up,” said Tanya Ang, policy and outreach director at Veterans Education Success.

Democrats in Congress have shown serious interest in addressing what critics of the rule call the veterans' loophole. Lawmakers have introduced eight bills this Congress to modify the 90-10 rule. Some would count veterans' benefits toward the cap, while others propose changing the ratio to 85-15, the original ratio until 1998.

Some would do both. That was the approach in the Aim Higher Act, a 2018 proposal from House Democrats to reauthorize the Higher Education Act.

Representatives of for-profit colleges are taking note of those proposals. Career Education Colleges and Universities, the trade group for the sector, said responding to 90-10 legislation is a top priority.

“All we’re talking about is stopping veterans from going to the schools they choose to go to,” said Michael Dakduk, executive vice president of CECU and a co-chair of Veterans for Career Education.

As for-profit chains faced intense scrutiny from federal regulators under the Obama administration, DeVry University opted to voluntarily set a target ratio of 85-15 itself.

Republicans in Congress recently have suggested doing away with the rule altogether. The House PROSPER Act, for example, proposed eliminating 90-10. And in a staff white paper released last year, Senator Lamar Alexander, the Tennessee Republican who chairs the Senate education committee, suggested the rule does more to gauge students’ ability to pay for a program than their willingness to pay.

That paper cited a 2013 analysis by Mark Kantrowitz, a student aid expert and publisher of Savingforcollege.com, who found that including veterans' benefits would have a negligible impact on the federal aid ratio of most colleges. But Kantrowitz said the rule is of limited use because it doesn’t actually measure program quality.

“Mostly it’s a proxy of the number of wealthy students a college enrolls who are not receiving any financial aid,” he said.

But advocates for the rule insist it is a useful market test of the value of for-profit programs. And they argue the exemption of veterans' benefits from the rule creates an incentive to target those students for enrollment.

Even some public colleges have lobbied to tighten the rule. The University of North Carolina system has named 90-10 as one of its priorities for HEA reauthorization. That’s partly because the system is designated as the state authorizing agency for postsecondary institutions in North Carolina, said Dan Harrison, UNC’s senior associate vice president for academic and regulatory affairs.

“While there are certainly good reasons that student veterans might choose to go to a proprietary school, we generally feel that they ought to be able to do so without being subjected to undue pressure because of targeting thanks to the 90-10 loophole,” he said.

CECU argues that counting veterans and military benefits toward the rule would result in for-profits enrolling fewer of those students.

“How do you comply with the rule? It’s simple. You restrict veterans from coming to the school,” Dakduk said. “It’s not going to solve any of the problems that critics of the sector suggest it would solve.”

A CECU analysis estimated that 260 of the group's member schools would close if veteran and service member benefits were counted toward the cap.

Clare McCann, deputy director for federal higher education policy at New America, said it would be difficult for lawmakers of either party to ignore the 90-10 rule, with most veterans' groups in lockstep on the issue. In addition to Student Veterans of America and Veterans Education Success, organizations including the American Legion, Iraq and Afghanistan Veterans of America, the Military Officers Association of America, the National Military Family Association, and Tragedy Assistance Program for Survivors back a change to the rule.

“Veterans' groups have been extremely effective when they band together,” she said.

Wesley Wilson, an army veteran and a fellow at High Ground Veterans Advocacy, said many veterans first enroll in for-profit colleges while they are still in active service because of both convenience and word of mouth. He said the military often isn’t accommodating of enrollment at local community colleges -- partly because online programs have more flexible schedules -- and many service members are more familiar with for-profit programs.

“When I was in the service, everybody that I knew basically went to a for-profit school like Kaplan or the University of Phoenix,” he said. “Everyone that I served with, those were the schools they were going to.”

Wilson attended American Military University during his service before later transferring to Fordham University. He’s now a graduate student at the Maxwell School of Citizenship and Public Affairs at Syracuse University. Wilson said the real marketing to veterans begins after they leave the military.

“There’s a huge target on veterans’ backs,” he said. “If you make us worth less money, there’s less incentive to be more aggressive with your recruitment or marketing.”

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