Encouraging Exploitation of the Military by For-Profit Colleges: The New GI Bill and the 90/10 Rule

Abstract

Amid reports of misrepresentation, predatory recruiting practices, and misappropriation of federal funding, many have been left wondering whether there is any actual legitimacy in for-profit education. Increased visibility in the media and an exponential enrollment increase in recent years has prompted numerous studies and committee reports by the Department of Education. In response, the Obama Administration introduced more stringent gainful employment regulations in October 2011. However, these regulations do not address concerns that for-profit educational institutions are targeting former and current military members in order to bypass existing Department of Education regulations. Under the 1998 amendments to the Higher Education Act, for-profit institutions are required to show that at least 10% of their revenue comes from sources other than Title IV federal student aid. This legislation, known as the 90/10 Rule, incentivizes for-profits to enroll the highest number of military members possible because for every serviceman a school enrolls, they may enroll nine students who pay for their education with nothing but federal student aid. This comment submits that legislation leaving GI Bill funds on the 10% side of the 90/10 Rule equation leaves military members ripe for exploitation, an issue that new Department of Education regulations fail to identify.

Keywords: For-Profit Education, GI Bill, Taxpayer Funds, Higher Education, Military, Veterans

JEL Classification: J18, K2