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Some For-Profits Exceed Limits on Federal Funding

December 21, 2016

The U.S. Department of Education on Wednesday released the latest version of an annual report on compliance with the so-called 90/10 rule, which prohibits colleges from collecting more than 90 percent of their revenue from federal aid sources.

The report identifies 17 for-profit colleges that exceeded the limit, up from 14 the previous year. Two of the for-profits, Pat Wilson's Beauty College and United Medical and Business Institute, were out of compliance for two consecutive years and, as a result, have lost their ability to collect federal aid for at least two years. 

Southern Careers Institute, which has seven campuses in Texas, was at the top of the department's list. Federal aid comprised more than 98 percent of the $33 million the for-profit collected in annual revenue.

The department also released a new analysis showing that many more for-profits would exceed the 90/10 limit if dollars from Post 9/11 GI Bill and active-duty military student benefits were counted as federal aid. Nearly 200 institutions collecting a total of $8 billion in federal aid would exceed the 90-percent limit under that scenario, according to the department. 

Democrats in the U.S. Senate have attempted to close the veterans' benefit "loophole" in the 90/10 rule. But the Republican-led Congress is unlikely to back those efforts.

 

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Paul Fain

Paul Fain, Contributing Editor, came to Inside Higher Ed in September 2011, after a six-year stint covering leadership and finance for The Chronicle of Higher Education. Paul has also worked in higher ed P.R., with Widmeyer Communications, but couldn't stay away from reporting. A former staff writer for C-VILLE Weekly, a newspaper in Charlottesville, Va., Paul has written for The New York Times, Washington City Paper and Mother Jones. He's won a few journalism awards, including one for beat reporting from the Education Writers Association and the Dick Schaap Excellence in Sports Journalism Award. Paul got hooked on journalism while working too many hours at The Review, the student newspaper at the University of Delaware, where he earned a degree in political science in 1996. A native of Dayton, Ohio, and a long-suffering fan of the Cincinnati Bengals, Fain plays guitar in a band with more possible names than polished songs.

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